By Emily Wigens, ONE EU Director & Valentina Barbagallo, Global Citizen EU & Climate Lead 

Much has been said and written about the converging crises of COVID-19, conflict, and climate change. Less has been said, however, about the credibility crisis that is hurtling towards Brussels and the European Union.

The past two years have underscored that, in a global crisis, EU Member States increasingly turn to the EU. Unfortunately the Member States have not set the institutions up for success. Despite a strong political commitment to lead internationally, the EU’s budget for external action is unable to meet the scale of the challenges facing the world today.

The EU urgently needs new resources capable of meeting the moment. 

Securing these from Member States is going to be difficult with the cost of living crisis biting across the continent — although Member States must step up, too. There are, however, other proposals that, if adopted, could bring about a stepchange in ambition and progress. 

Later this year the European Commission will publish a proposal for a new set of “own resources” — options for raising revenues that would go directly into the EU budget, rather than national purses. It is through this process that the EU can take concrete steps to avoid a credibility crisis.

An international tax on financial transactions has been long debated, but never yet agreed, at EU level. 

The proposal is both simple and attractive: given the scale of transactions in financial markets, all that is needed is to apply a tax at an extremely low rate to raise significant tax revenues, without affecting the functioning of the markets. 

In 2013, the European Commission estimated that a Financial Transaction Tax (FTT) implemented by just 11 Member States participating in an Enhanced Cooperation Procedure could generate between €30-35 billion annually. 

With this idea once again gaining international traction as a means to rebalance the harmful effects of globalization, the EU should play a leading role in delivering such a game-changing agreement, and an ambitious proposal must therefore be central in a new basket of own-resources.

This is just one example. The EU must agree a broad package of new revenues, ensuring that there are sufficient funds in the EU budget to meet the challenges ahead. 

During exceptional times we need exceptional measures. Everyone must pay their share —‚ from industry (through windfall taxes on excessive profits), to investors (through an excise duty on share buy-backs), and the wealthiest in society. Anything less will be sure to undershoot in terms of the scale of ambition needed to address today’s global challenges.

Furthermore, the package should also introduce a new principle: that once Next Generation EU debt has been paid down, a large portion of new revenues should be allocated to the fight for climate justice and development.

This would ensure sufficient EU financing for the fight against extreme poverty and climate change and to support low-income countries in the face of the disruptions for which wealthy economies are mainly responsible. 

In June, an international summit in Paris will attempt to catalyze the first steps towards a new global financing pact. 

This is a prime opportunity for the EU to protect its credibility by setting out plans to ensure its deeds match its words — by supporting the adoption of new internationally coordinated levies, including an FTT, to raise at least $50 billion a year for development, climate, and biodiversity protection. In order to respond adequately to the urgent situation, these proposals must be operational by 2025.

The devastating war in Ukraine and the onslaught of climate events underline clearly how closely tied European security and stability is to that of our neighbors. 

The EU’s ability to forge strong partnerships and alliances is crucial for delivering our security, stability, and prosperity. If bold action isn’t taken to ensure everyone contributes funding to protect our future, then the EU’s ability to assert positive influence on the global stage will be severely hampered, and the trust of Europe’s allies and partners will waver again. 

It’s in all of our interests to steer clear of this credibility crisis.