As one EU diplomat described the situation, “the devil is in the detail” of the budget talks between the Council and the Parliament.
Last July, MEPs approved a compromise on the multi-annual financial framework (MFF), the EU's budget for 2014-2020, with a second vote expected this autumn to finalise the deal.
Approval is needed for a large package of legal documents, including the regulation containing the budget, and some 80 other implementation items. The package will also include an inter-institutional agreement detailing how the budget can be spent, including statements from the three EU institutions on subjects such as “own resources” - or funding that does not rely on national contributions.
Last but not least, the vote is conditional on the payment of a portion of the amending budget for 2013, amounting to €3.9 billion.
UK makes obstructions
An extraordinary meeting of the General Affairs Council (GAC) is to be held on 30 October because the UK has refused to add an additional agenda item to the draft amending budget in the 19 October regular GAC Council.
The Lithuanian Presidency also forgot to include such an agenda item on time. When agenda items are not added 14 days in advance, individual countries can oppose them.
While the UK cannot stop the amending budget - because decisions are taken by qualified majority - in this case it could at least delay it, diplomats told EurActiv.
But the Council also tried to link the disbursement of the €3.9 billion to another payment of €430 million, representing flood compensation for Germany, and also Austria, the Czech Republic and Romania.
Parliament rejected that linkage, as MEPs claimed the disbursement had already been agreed last summer, as part of 2013's total amending budget of €11.2 billion. Many MEPs also consider that Germany, the prime beneficiary, is in a good budgetary situation, so reducing the payment's urgency.
MEPs say that the €430 million was not planned and if this amount were disbursed for flood compensation, it would leave other more urgent activities, such as assistance for Syrian refugees, unfunded.
Council cannot decide on competences
Another sticking point is the establishment of a working group on ‘own resources’, which Parliament insists on. The issue appears to be that after the Commission had made a proposal, the Council could not decide under which framework it should operate – GAC or Ecofin.
An even more important issue is the large package of legal documents, including the Common Provisions Regulation, which would define the “partnership agreements” for payments made to individual countries.
The Council reportedly insists that countries should agree to the Commission Vice President for Economic and Monetary Affairs, currently Olli Rehn, being authorised to freeze payments to individual countries on all matters, except the Common Agricultural Policy.
MEPs have hinted at a possible compromise to be based on some form of co-decision between the Parliament and Council regarding the freezing of payments. The freezing of funds for countries with high unemployment rates is another option, although the Council is apparently strongly opposed to this.
Parliament also insists that 25% of the cohesion fund revenues be made available to the European Social Fund, as happens now. It is not a question of having additional resources so much as one of internal re-distribution, but again the council is reportedly unenthusiastic.
Finally, two parliamentary committees, LIBE and AFET, are opposed to the delegated acts in favour of the Commission. The Lisbon Treaty introduce these delegated acts as a special category of law in addition to EU directives and regulations. With these, MEPs give the Commission the option to supplement or amend (which means decide) certain non-essential elements of the EU law or framework law.
Speaking to EurActiv, MEP Ivailo Kalfin (Bulgaria), the S&D's representative in trilogue budget talks, said that the legal issues appeared to be more serious than linkage between floods compensation and the second tranche of the 2013 amending budget.
“The Parliament is fully committed to the July agreement. The Council’s bickering is doing harm to the interest of the Union,” Kalfin said.
“The risk of implementation of the MFF [the long-term budget] from 1 January 2014 exists,” an EU diplomat told a group of journalists.
Even if a consensus is found by the November session of the European Parliament, the volume of technical work to finalise the agreement makes it uncertain whether implementation of the long-term budget could begin from January 2014.
No “shutdown” like the one in the USA is expected in Brussels. In the absence of an agreement on the long-term budget, the 2013 budget would apply for 2014, but some long-term programs as in the field of cohesion are likely to be affected.