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BUDGET

Is Erasmus really worth its budget boost?

Erasmus, the world's biggest student exchange, is to expand after 25 years of funding European students to go abroad. But with the EU budget being slashed, does the grant scheme deserve a 50 percent boost to its budget?

Is Erasmus really worth its budget boost?
Students celebrate "International Day" on November 6th at the Viadrina University in Frankfurt an der Oder. Photo: DPA

Since its launch in 1988, the EU's flagship student programme has paid grants to over three million Europeans in higher education to study or work elsewhere in the Union.

The 2011-2012 academic year saw 3,328 learning institutions across Europe sending their students abroad on Erasmus placements, among them 33,363 of Germany's best and brightest.

And the "Erasmus+" project approved by the European parliament on Tuesday will invest in the scheme further, merging the student exchange with six other education initiatives to form a "streamlined" programme to give financial support to 4 million people, at a cost of €14.7 billion over seven years.

Around €4.9 billion of that is dedicated to grants for higher education and it represents around a 50 percent increase on Erasmus' budget for the previous seven years.

The new unified system will extend beneficiaries to include "youth leaders, volunteers and young sportsmen", according to the Parliament.

But with austerity-hit member states wrestling the EU's next seven-year budget down by €15 billion to €960 billion – the first cut to a multi-year plan in the Union's history – some are questioning why more taxpayer cash is being spent on non-means-tested grants to university students, while other initiatives are seeing cuts.

Stuart Agnew, an MEP from the anti-EU UK Independence Party, told the European Parliament on Tuesday he saw Erasmus as an unnecessary and "glorified" alternative to national-run programmes, and attacked it as the EU "cynically using" young people to "further its own objectives" in fostering "European values."

Spanish education minister Jose Ignacio Wert also criticized the Erasmus+ plans on Monday, when he claimed Spain – which sent and received more Erasmus students than any other EU member state in the 2011/2012 academic year – would have to halve their grant payments under the new programme's funding system.

But EU education spokesman Dennis Abbot dismissed the Spanish minister's announcement as "rubbish" and "totally false."

The scheme seemed in jeopardy back in October 2012 when it posted a €90 million budget deficit just as EU institutions faced an overall shortfall of €8.9 billion for the year.

EU Commission president Jose Manuel Barroso leapt to the scheme's defence. "These payments are essential to revive growth and jobs in Europe," he said in a statement in October last year.

Prominent Germans also showed support for the scheme in an open letter to budget negotiators in Brussels in October 2012, Stern magazine reported in November that year.

The letter, signed by a hundred people including actor Daniel Brühl and author Cornelia Funke, urged budgeters to come through for year abroad students. "We hope the Erasmus budget for 2012 and 2013 will be enough to fulfil the commitments already made," it said.

Erasmus means "thousands of people are given the chance for life-changing experiences", the letter added.

And as debate continued, students planning their years abroad at universities across the 28 EU member states were left unsure if they would receive funding for their own "life-changing experiences."

But when a last-minute agreement by European Parliament and member states plugged part of the shortfall with a €6 billion budget "top-up" in December, Erasmus was among the projects saved, with the Commission proudly announcing it would fund 280,000 exchange students in the 2013-2014 academic year.

So why has a programme which went €90 million over budget last year and came close to leaving thousands of year abroad hopefuls high and dry not just escaped budget cutbacks but netted further support and funds in the new EU seven-year  budget plan?

Brikena Xhomaqi, director of the Erasmus Student Network (ESN), a body representing Erasmus students, told The Local the scheme stood out among EU programmes as a particular success.

"It is the only EU initiative that's worked well across all the member countries," she said, because it allows people to "travel across borders, make new friends and develop their European identity."

Doing an Erasmus placement also makes young people more employable, according to ESN treasurer Jonathan Jelves. "Just the experience itself is a huge challenge," he told The Local.

It is an "empowering experience" and "forces people to grow and become independent," he added.

Students return from Erasmus "having matured a great deal," he said, and "are ahead of their peers." "They are more effective, productive workers," compared to the average graduate, he said.

Jelves also extolled the value of Erasmus to the European job market. "Erasmus students become very mobile, not afraid to move around," he said.

"They don't have this fear of going to work in a new country with a new language because they've already done it," he explained.

READ MORE: Former Chancellor says Britain a problem within the EU

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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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