EU states demand budget leeway to cope with refugee crisis

As Europe faces refugee crisis, EU finance ministers ask for refugee funding to be stripped out from their budget, while European Commission says fiscal rules must be respected

Photo by: AP
Photo by: AP

Refugees disembark from a ferry as they arrive from the northeastern Greek island of Lesbos to the Athens' port of Piraeus, September 9, 2015

Since the beginning of the year, about 500,000 refugees have reached the European Union, fleeing war and poverty in their home countries.

The economic impact of the influx should be taken into account when the European Commission reviews national budgets in the coming weeks, Luxembourg Finance Minister Pierre Gramegna said as EU finance ministers gathered on Friday in Luxembourg for a regular monthly meeting.

"We have asked the Commission to make an economic and financial analysis of what the financial impact of the refugees crisis can be," Gramegna told a news conference at the end of the meeting.

Luxembourg holds the six-month presidency of the EU and spoke on behalf of several EU countries who raised the issue during the meeting.

"We will examine that in the framework of our rules because we must also stick to the commitments," EU Economics Commissioner Pierre Moscovici told reporters.

European Commission President Jean-Claude Juncker proposed on Wednesday a plan to relocate a total of 160,000 asylum seekers across EU countries. He estimated a cost to the EU of 780 million euros ($880 million) over two years. EU states are expected to contribute with national resources, too.

Moscovici, who is in charge of supervising eurozone budgets, agreed to examine the economic impact of the crisis and may present his findings on October 5, the next meeting of eurozone ministers. Eurozone countries are due to submit their draft budgets to Brussels on October 15.

The European Commission has the authority to send back the draft budgets and push for changes, thanks to the new rules adopted after the eurozone's 2009-2014 debt crisis.

Moscovici said that "several" countries asked for the economic analysis, which can lead to some leeway on the eurozone's strict budget rules. Beside Luxembourg, Austria, Italy and Ireland raised this issue.

The outcome of the analysis is far from clear. Some eurozone states, such as Germany, are likely to oppose too much flexibility for countries with high public debt and deficit.