Leading MEP: A witness to amazing things at budget summits

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Even if there is no agreement reached at the 22-23 November EU summit, the discussion is necessary, says MEP Ivailo Kalfin, one of the two European Parliament rapporteurs on the 2014-2020 EU budget. As a foreign minister during the negotiation of the previous budget, he said he saw major misunderstandings at the summit table.

MEP Ivailo Kalfin (Socialists and Democrats), an economist, has served as deputy prime minister and foreign minister of Bulgaria and helped negotiate the country’s entry into the EU. He spoke to EurActiv Senior Editor Georgi Gotev.

You are one of the two European Parliament rapporteurs on the EU budget for 2014-2020. What is the state of play ahead of the 22-23 November summit? How does the Parliament look at the latest proposal by Council President Herman Van Rompuy? Does the European Parliament still plan to adopt a resolution on the EU budget tomorrow (21 November)?

Most probably the Parliament is not going to adopt a new resolution because we adopted a very detailed interim report at our session in October. And the ‘negotiating box’ tabled by Mr. Van Rompuy as well as the previous negotiating box tabled by the Cypriot presidency after the interim report of the Parliament do not change very much the approach so far of the Council, and we clearly said that we have several concerns with this approach.

So we have nothing new to say. But I would very much advise the Council to read very carefully the resolution, the interim report, we adopted in October, because the procedure according to the Lisbon Treaty is that the MFF has to adopted by unanimity in the Council but after having agreed of the parliament. So any agreement coming from the forthcoming summit is going to be pending the adoption of the parliament. On our side, we have expressed very clearly a number of concerns related with the Council’s proposals.

Parliament can veto the budget agreement, if there is one, but will that be helpful?

The question is do we need a bad budget or no budget at all, or more time for negotiation. The parliament would like to have an agreement now. But we are not going to accept any agreement. Unfortunately we have the pending issues with the budgets of the budget of 2012 and 2013 and this is going to accumulate a further blockage in inter-institutional relations. We have one basic concern, also after the consultation with Mr Van Rompuy’s office, who invited also the parliament representatives to hear our views.

The issue is the following: Mr Van Rompuy and the [Cypriot] presidency try to accommodate 27, sometimes very divergent national opinions. What the parliament says is that this exercise is about setting the policies of the European Union until 2020. It is not on accommodating 27 divergent positions. We are speaking about a period in 10 years time and the major concern of the parliament is that the budget it to achieve the political goals set by the Council itself.

Therefore we are not fighting for figures and we are not interested in accommodating the different opinions, which would be something efficient for the moment. Instead, we are trying to look for the policies and what the European Union wants to achieve until 2020. This is the basis then to adopt a budget and to properly distribute the different priorities in the budget. We don’t see this in the negotiating box, in neither that of the Cypriot presidency, nor of Mr Van Rompuy.

Nevertheless the proposal of Van Rompuy appears to favour certain European policies - I’m thinking of the Connecting Europe Facility, the financing of which was heavily slashed under the Cypriot proposal…

That is true, but we have to see what we take as a basis. We had the Commission’s proposal, then we had the Cypriot presidency proposal, which was extremely disproportionate, cutting exactly where the European Union needs to have its priorities.

Now we have Mr Van Rompuy’s proposal, which has partially fixed the problems and the balance originally proposed by the Commission is more or less kept. This is one of the concerns. We have very strong supporters of Cohesion, very strong supporters of agricultural policy, but where the competitiveness of Europe, the innovation capacity, the youth mobility and education and youth employment issues, they are not at all seen in the negotiating box…

Another improvement appears to be the proposal by Van Rompuy that for the 11 countries that are to put in place the financial transaction tax (FTT) through enhanced cooperation, this would be a new resource for the EU budget.

Exactly. This is another step forward in Van Rompuy’s proposal. Apparently there won’t be an agreement to have the FTT tax as a common instrument, but what we would like to see is that these countries that would go along with the enhanced cooperation procedure use partially this money for own resources to the European budget.

Of course this means that their national contributions are going to be correspondingly decreased and at the end of the day 100% of the revenues are going to be reflected in the national budgets of these countries, still making the European budget a little bit more independent and also lifting some of the burden on the national budget in terms of deficit. Because have a lower contribution to the European budget, you have a lower deficit, particularly more room for economic decisions. Therefore Mr Van Rompuy’s proposal is to go in that direction to introduce this tax and to use it as an own resource. It doesn’t make the European budget bigger but it makes it more autonomous.

I’m perhaps simplifying, but what strikes in the Van Rompuy proposal are the big cuts made mainly in two areas – agriculture and cohesion…

Well, they also cut quite substantially the external action of the EU and some cuts, smaller, in the first heading, which is related to competitiveness, research, innovation, etc. So you have a cut across the board according to Mr Van Rompuy’s proposals which goes more or less evenly through the different policies. And this is one of the problems for the Parliament. Because if you have increased political ambitions, if you have increased competences of the European institutions stemming form the Lisbon Treaty, if you have an increased European Union with 28 member states, you cannot achieve these more ambitious political goals with less money. That means if you want to decrease, then you have to look at the policies and see what are the policies that the EU should either abandon or at least postpone. Because it’s indeed not possible to cut across the board to say all the policies are going to be decreased. In some cases this is not doable.

Are there such policies that can be ‘postponed’?

Yes, but there’s a difficult agreement between the member states. There is a question if the EU has to continue supporting the large, fundamental research projects like ITER and Galileo. There are €14 billion that go to them. There is a question about whether the greening of the policy can be helped with the decreased subsidy for the agriculture sector. There is a huge question mark not only with the sizes devoted to the cohesion policy but also with the number of [conditions] including the macroeconomic conditionality for cohesion policy which is a very wrong tool, I believe, and the Parliament is against it.

So if you want to cut down the budget you have to say what you’re not going to deliver. We keep have a discrepancy between political commitments and budgetary engagements. The last example is the June European Council when the heads of the member states decided to support the growth and jobs compact with €150 billion. Now we see that they are not ready to pay the bills that are falling this year to the European commission, and the EC is a liquidity crisis.

So you say EU leaders don’t follow up on their commitments?

Exactly, this is the case. And this is the big concern of the Parliament. We would like to have commitments matched with the adequate budget, or if it is not possible to re-evaluate the political commitments.

We are talking about the EU budget for 2014-2020 against the background of lack of agreement on the correction budget for 2012 and a lack of agreement whatsoever on the 2013 budget. Isn’t this precisely a case where leaders have failed to their commitments?

Absolutely. This is a very clear fact.

The pending €9 billion until the end of October of the European budget [for 2012] is not new money. This is within the frames of the commitments in the existing MFF. The problem with this money appearing now is that they were saved in the previous years. They are projects that have ended now. Simply the invoices for these projects are coming later. This is money that the member states have saved in the previous years but this is part of the overall commitment that they have made. What happens now?

They say they are not going to pay the bills. They promised last year that if there is such a case, because it was expected to happen, they said they are going to foot the bill. They didn’t do so. Now they suggest to transfer it to next year. That would mean that if there is no change and no agreement, the European Commission is going to stop payments in the middle of 2013. In any case we cannot say that this is matching commitments with appropriate budgetary engagements of the member states.

So the fact there is no agreement for 2012 and 2013 doesn’t make the decision for the long-term budget any easier?

It is not easier, especially since we see that we cannot agree on short term and very visible problems. Again the European Union has to pay the bills and has to pay the bills of countries that are suffering problems. I mean the major countries that expect those payments are Italy, Spain, Poland, even Germany has nearly €900 million to receive from the European budget. So not paying what is already committed creates a very bad taste when we speak about agreements until 2020. If we cannot solve the problem in the coming months which is visible, which is not disputed, which is something which the member states have already agreed, then how can we make long term promises? It has to do with the credibility of the EU unfortunately.

I hear people around Van Rompuy saying let’s agree now, because in three or four months’ time when another summit could be organised, there could be no game changer. Probably the situation would even deteriorate due to the lack of confidence in EU decision making … Do they have a point?

They certainly have a point. The problem is again how we look at this agreement. Is it an agreement per se that we just try to close the file and leave the room for others? Or do we really want to adopt a budget which going to helpful for the EU in the years to come? And I’m afraid that the approach of the presidency is not the long term vision but the short-term solution.

I agree that in the coming months, neither the economic situation is going to improve, at least this what the forecasts are showing, nor will there be major changes in some of the countries that are not willing to agree at this stage. By the way if we look at history of the MFF [the multi-annual financial framework, or EU budget] it was adopted at more than one summit. Until now this was an agenda item in the European Councils and it was always overshadowed by something else. It was never properly discussed. So I would like that they have an agreement, but what I want to say is not any agreement is going to be acceptable for the Parliament and that a bad agreement doesn’t make the situation better.

If UK Prime Minister David Cameron comes to the summit, but after 30 minutes leaves the room, should other leaders stay on and continue to discuss the budget?

I think that this issue has to be discussed. I mean, I have seen [as Bulgaria’s foreign minister during the 2007-2014 budget talks] amazingly in the different member states that they have different visions and even different bases for comparisons to do with the European budget.

Very often member states and responsible people are mixing commitments and payments in the budget and are mixing which year to be taken as a basis for a freeze for example… There are piles of misunderstanding, also in the approach of different member state. So any discussion would be beneficial.

If the UK declares from the very outset that they would be against the European budget, that’s going to be a very bad signal. And a country which is planning to have a referendum on whether to stay in the EU in 2015, isolating itself and claiming for a budget until 2020 is something which is going to be very difficult to swallow.

Would Parliament back the Council if they continue discussions and even if they agree on a budget without Mr Cameron?

It’s not possible, practically.

Again, the procedure is very clear in the Lisbon Treaty. You need unanimity in the Council on the basis of an agreement by the Parliament. So we cannot avoid that. If there is no agreement at this summit, again I think that any discussion is going to be good. That’s going to be the first serious discussion at the level of the heads of state and governments. And I would very much encourage the Council to look for a solution, if not now then in the coming few months, because afterwards I’m really worried that the political calendar is not going to be beneficial.

Do you expect any trick at the level of Council conclusions to accommodate the UK?

No. I wouldn’t try to find ways to circumvent the treaty. There should be an agreement among 27 and the Parliament. If there is no agreement this is not the end of the world. The EU is going to continue functioning and the treaty also has a provision how that could happen. By the way that would mean then that the UK and all those who want to decrease the budget would have to pay more than they wish.

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