In a discussion with John Papageorgiou (published in Greek on insider.gr) on the future of the EU budget, Carla Tavares, co-rapporteur on the post-2027 Multiannual Financial Framework (MFF) in the European Parliament’s Budget Committee, emphasizes that “we cannot demand more from the Union with the same money.” She underscores the need to keep common loans as an option and describes the European Commission’s proposal on defence budget as “a first step, given the circumstances.” However, she firmly insists that Cohesion Funds of the next MFF should not be redirected toward defence, warning that “every time a crisis strikes, we cannot turn to Cohesion Funds.”

How do you evaluate the Commission’s proposal to increase defense funding, and what potential impact could it have on your responsibilities within the Budget Committee?

The circumstances have changed, the global order as we know it since post war and the United States post-war global role in guaranteeing peace and security is shifting, the Leaders have requested the Commission last year to come up with a proposal.
This proposal to the European Council is a first step, given the circumstances; it had to be outside the MFF. The present MFF already had a revision. The next MFF will be in place in 2028, so I see this proposal as something needed in-between.
First allow me to say that In the Commission proposals, none involved the European Parliament in its role as co-legislator and budgetary authority. Furthermore, there are also some comments that should be stressed in several areas.
Regarding the proposed flexibility in Cohesion Funds and the proposal to modify rules so that these funds can be used for military projects -although we understand the urgent need for funding- the European Parliament thinks Cohesion Funds have a role to play in economic and social convergence in the Union. Every time a crisis strikes, we cannot turn to Cohesion Funds.
Now, as far as the flexibility of Stability and Growth Pact Rules, allowing extra defence spending to be excluded from deficit and debt calculations is a decision where the EP has no say. We also have no involvement concerning the change European Investment Bank (EIB) mandate in order to allow its loans directly support the defence industry, beyond dual-use projects. This is also a member-states decision who sit on the EIB Board.
Referring to the Alternative Financing via Article 122 of the EU Treaty and the possible use of the pandemic-era SURE instrument to fast-track defence loans without parliamentary approval, indeed this is a model that worked before in urgent circumstances. But the Parliament has proved in the RRF case that is can work quickly and be up to the challenge.
There is also a focus on Strategic Defence Investments so as funds to be directed toward air and missile defence, drones, space, cyber, and AI military applications. We hope this model of financing that uses the EU Budget as guarantee but does not take the Parliament, as budgetary authority, in its governance is not replicated in the next MFF proposal.

All stakeholders, including the European Parliament, agree that the EU’s financial needs are increasing. Member States seem reluctant to commit to higher contribution, and no significant progress has been made so far on new own resources in the Council. This makes a reshaping of the Multiannual Financial Framework (MFF) inevitable. In which direction should this re-shaping go? And even at this early stage of the debate, are there any red lines you would like to highlight from your side?

I think we are all aware we cannot do more with the same amount of money. Defence investments require amounts of significant level, so we need to understand what we want to do through the EU Budget for defence.
At the same time, we have policies that are essential for long-term investment in the Union, such as Cohesion and Agriculture. Innovation is also crucial. The Union may now need to take a bigger role in the world, in guaranteeing peace and security, in leading on global governance and in providing essential development aid to those most in need around the world.
We want to explore every possibility allowed in the MFF. We think that predictability is essential, but in a 7-year budget more flexibility is needed so we propose to reshape flexibility with a larger flexibility instrument.
Own resources negotiations need to progress. New own resources are needed. We have to repay NGEU without cutting policies. We need to think of all tools and instruments available.
And concluding, I must say that we have serious doubts about some of the Commission guidelines for one plan per member-state. What does it mean? Nobody knows.
Nevertheless, maybe instead of talking about red lines, let us leave the door open to explore all availabilities.  The fact is that we need an effective budget, and we are willing to work for it. 

In your draft report, you emphasize that “competitiveness must be understood as encompassing not only economic growth, but also social, economic, and territorial cohesion.” This suggests a debate between a growth model similar to the Recovery and Resilience Facility (RRF) and the traditional cohesion policy model. What should be the right balance in the next MFF?

What we mean here is that competitiveness must be understood in all its fronts. People’s welfare is the key. We cannot increase divergences. Competitiveness must promote upwards convergence and decrease inequalities. If you think about the RRF model, it had a big social component and it had social impact in the Member States. So, it does not have to be one versus the other.
Having said that, I must stress that structural funds are essential for the development and the convergence in member states. Many of them had to focus on the implementation of their RRPs projects as there is a strict timeline and a deadline in August 2026. But this doesn’t mean -as some say- that the need for cohesion policy has changed. Therefore, and also going back to the first question about the Commission’s proposal on defence, we could consider that if there are unspent funds now in the end of the current MFF, they may turn to support defence expenditures on a voluntary basis. But for sure, we shouldn’t cut or redirect to defense structural funds from the next MFF upfront. This would be a mistake.

Would you agree that for the next EU budget to achieve its objectives, the Single Market must be fully completed in practice? I am referring not only to the banking union and the capital markets union but also to state aid policy. How crucial are these elements to the success of the next MFF?

I agree, completing the Single Market is an essential element for the next EU Multiannual Financial Framework (MFF) to achieve its objectives and amplify its impact. The Draghi and Letta Reports already emphasized that completing the Banking Union (unfinished after more than a decade) and Capital Markets Union are key to establishing a “real” single market in financial services. Additionally, a robust state aid policy would also ensure fair competition and prevent market distortions. These elements collectively enhance financial integration, economic resilience, and the efficient allocation of resources, thereby underpinning the success of the MFF. 

Do you foresee any form of common borrowing in the next EU budget, similar to the model of the RRF? If so, in which direction should it go? And in relation to this, what would you propose regarding the repayment of the RRF loans?

In S&D, we believe that joint borrowing should be an available instrument. The Union should have a permanent fiscal capacity. When the need arises, we should be able to resort to it swiftly, rather than creating a new instrument every time an urgent situation emerges. We have already had NGEU, SURE, and now a new Instrument for Defence. If a more permanent mechanism were in place, it would be much more efficient with a greater impact. This is why new own resources are necessary. Regarding loans repayment, this is a responsibility of the Member States that requested the loans.

Finally, given the increased budget needed for the EU additional targets, do you think some priorities—such as the green transition, which has been a key focus for the Socialist group as well—might inevitably take a back seat?

We all know that the EU Budget for 7 years is smaller than a large capital’s Budget. Of course, the functioning and the rules are different. We are talking about the size but also about the competence.
What is clear for me is that we cannot demand more from the Union with the same money. It is not possible in a national budget. It is not possible here. If you call the EU to coordinate a pandemic response, to coordinate Defence response, you need to reinforce its budget.
In addition, the parliament must be fully involved the Union’s choices. It is what the Treaty says. It is what we want.
Now, regarding our priorities, the Green transition is inevitable. Climate and environment is still one of the main areas Europeans think the EU should take measures in the next five years.
So, if we are going to support Industry, let us do it in a way that does not harm the environment. Climate investment can be a horizontal target, and when you invest EU money, you contribute to the green transition.