The European Parliament meeting in Strasbourg yesterday (13 June) approved by a large majority the assembly’s position for the long-term budget. The complex package refers to 60 legislative proposals and demands member states to agree on giving the EU its own resources to better match its 2020 strategic goals.
"We can win together or fail separately,” said Joseph Daul, leader of the centre-right European People’s Party (EPP) in an unusually heartened speech.
“The reality is that no European country can cope on its own with global challenges, whether they are economic, social, demographic, military or political,” Daul added, urging leaders to move from bold decisions to strong actions.
Although EU leaders will start discussing the new long-term budget at a summit on 28-29 June, negotiations have already started. Divisions among member states are significant, especially on the adoption of a financial transactions tax (FTT), which will enable the EU to have its own revenue.
Centre-right MEP Alain Lamassoure told EurActiv that the countries’ positions expressed so far are those spelled out by budget ministers, who do not see the full picture. Once EU leaders get to the negotiating table the debate will shift. “If not, Parliament will simply not vote for the MFF,” he said.
On the same line, Guy Verhofstadt, leader of the liberal ALDE group in the European Parliament, said that “a credible Union needs a credible budget and a credible budget needs income, and not a membership fee of 1%, as if the Union was some local neighbourhood club.”
The current EU funding system relies primarily on national contributions and has become extremely complex over the years, with 44 different exceptions, the British rebate being one of them.
“Nobody understands anymore who pays what,” Verhofstadt told journalists.
The Greens in the European Parliament concur: “It is about re-establishing trust with the European citizens,” said Rebecca Harms, co-leader of the Greens/EFA group.
EU budget is not for Brussels: Barroso
The exchange of views ahead of the vote took place before European Commission President José Manuel Barroso, who proposed concluding an interinstitutional agreement with Parliament on the growth initiative, “which would set a fast timetable and get things moving.”
“We need to dispel the myth that the EU budget is a budget for Brussels. The EU budget is money for our regions, our cities, our rural areas," Barroso said. "If we agree that targeted investments are needed to complement structural reforms, then this needs to be reflected in our budget.”
In June 2011, Barroso proposed increasing the EU budget from the current €976 billion to €1.025 trillion for the next seven-year period, which starts in 2014. But Germany and six other member states have called for freezing the EU budget, stressing their national contributions are put under strain by the economic and eurozone crisis.
Speaking in Parliament, Barroso resisted those calls, saying the reduction would represent around "€100 billion" over the seven-year period, with an effect on public finances equivalent to 0.084% of the EU's GDP.
“This is an amount that certainly does not make or break sound public finances in Europe!", Barroso said.
Budget Commission Janusz Lewandowski repeatedly underlined that the proposal for the FTT could halve member states’ contributions by bringing €54 billion for the EU budget, assuming the two-thirds of the income from the tax would go to the EU budget and one-third to national budgets.
The Commission claims the tax will deter risky trading and ensure that the financial sector pays its share, as public debt has surged from below 60% of GDP to 80% due to the financial crisis and member states had to spend €4.6 trillion to bail out the financial sector.
If member states do not agree on the financial transaction tax, the Commission will have to come with another proposal to boost the EU own resources, either a carbon tax or a tax on mobile communications, said French MEP Lamassoure.
Less budget means less Europe
Responding to MEP and UK Independent Pary leader Nigel Farage, who claimed “the euro Titanic has hit the iceberg and there are simply not enough lifeboats,” some MEPs siad the problem is not the euro but the lack of sound economic and fiscal governance to support it.
A banking union, a fiscal union, a political union cannot happen without additional budget, say MEPs. “The debate is not abstract, but it is the real bedrock of political sovereignty,” thundered Daniel Cohn-Bendit, co-leader of the Greens/EFA group.