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06/12/2016

Jacek Dominik: EU budget is ‘hostage to national politics’

EU Priorities 2020

Jacek Dominik: EU budget is ‘hostage to national politics’

Jacek Dominik [Georgi Gotev]

EU budget commissioner Jacek Dominik said yesterday (24 September) that it was “very dangerous” that over the last few years, the EU budget has become hostage to national politics, and that a “hardcore” of net payers were saying “no” to whatever proposals the Commission was making.

Dominik spoke to a small group of journalists after he warned the Council and the European Parliament on the same day that shortages of payments in the EU budget are increasing due to adopted budgets that are consistently below requirements. “It is no longer business as usual,” he argued.

The commissioner explained that the purpose of the discussion with the Parliament and the Council was to have an exchange of views and explore what type of solutions can be applied. The representatives of the three institutions decided to meet “in camera”, without the presence of the press, so that they could be less concerned about their own performance in front of cameras, and rather concentrate on the issues as such.

This was not a “trialogue” meeting, but rather a preparation for a meeting of the representatives of the three institution to decide on the amending budget for 2014 to be held on 25 October.

As EurActiv reported, member states are pushing for cuts to the Commission’s draft budget for 2015, apparently in contradiction with the Union’s main priorities. For the budget heading covering growth and jobs, including youth unemployment, €1.3 billion in payments are cut.

>> Read: Member states slash EU budget for growth and jobs, innovation

Regarding the amending budget, Dominik explained that the backlog of the EU budget comes from the fact that every year, certain payments are transferred for the following year, because bills stop being paid by October, and bills that arrive later are transferred to the following year. Normally this hasn’t caused problems, but in the latest three years, the amount of bills has substantially increased, from €10 billion to €23 billion. In some areas, as in cohesion policy, the backlog now constitutes half of the budget line.

“This means that on the 2nd of January, half of the budget for cohesion policy is already spent,” Dominik said.

The idea, he said, is to solve this problem and “to regain manageability of the EU budget, to put it back on track”.

That’s why the Commission has proposed an amending budget of €4.7 billion, Dominik said, at the same time indicating the additional resources available in the EU budget, coming from fines imposed on companies under EU’s competition rules. Dominik added that fortunately the two balance themselves, and the additional resource is only €105 million, to be paid by the 28 members. In comparison, the annual EU budget is of €140 billion.

To avoid snowballing backlogs, the Commission has proposed implementing maximum ceilings of payments in 2015, the Commissioner said.

“We want the total amount to be immediately at our disposal. This would help us both to pay most of the remaining bills, but also it would help us to better manage the budget and avoid tensions concerning liquidity,” he said.

“We try to stop the negative processes in EU budget and to regain control to make it more manageable, so that the whole MFF 2014-2020 be implementable,” the Commissioner said. The Multi Annual Financial Framework (MFF) is a jargon term for the long-term EU budget.

MEPs said they shared the Commission’s views and approach, Dominik said.

“Now we have to convince the Council to do this. Usually the Council has hesitations, but the tricky element is that this year, they don’t need to put additional money, if they agree to our proposal.”

Dominik said there had been three years in a row when the Council had deliberately decreased payment levels “much below any reasonable level”, declaring that if there would be any additional need, member states would pay it. A declaration in that sense was always attached to the annual budget and is legally binding. This means that member states knew that the Commission would have to shift more unpaid bills to the following years, he said.

Asked about the countries who make objections, he didn’t name any, but pointed out at “a hardcore group” within the net payers in the Council “that always says “no”, whatever proposal [the Commission] makes”.

“The EU budget is hostage to national politics for a couple of years already. And this is becoming very dangerous. Countries try to blame Brussels and the EU budget for problems they create themselves, in their national budgets. EU budget is only 1% of the EU’s GNI. So it is not a major burden for EU member states”, the Commissioner said.

Dominik said that “even in the difficult times”, neither Latvia, Greece or Ireland, or other countries under programs, have ever questioned their contribution to the EU budget.

“Countries that question their contribution are usually much better off. And they question it constantly. Although their companies are substantial beneficiaries of the EU budget,” he commented.

The Commissioner also indicated that in fact, the “net payers” were also the largest beneficiaies of EU money.

“The picture of the final beneficiaries differs depending which level of transfers you look at. If you look just at the global transfer of Brussels to the capitals, you will see that there are some well-known net payers. But then if you look at who is actually providing an invoice for a particular amount of money, it very often changes the region and goes completely in a different direction and ends up in the coffers in a completely different country,” Dominik explained.

Asked what will happen if there is no agreement on the amending budget, he said that would be an infringement of EU treaties by the member states.

“There might be a situation when we really run out of money. But this would be an infringement of the treaties by member states. They have accepted those programs, and MFF has been adopted by all 28 member states unanimously. All of them were fully aware how much money they should provide to finance those programs. Now they cannot say “we don’t care, we will not provide you money.”

Background

At a summit on 8 February, EU leaders reached agreement on a €960 billion long-term budget for 2014-2020, representing the first net reduction to the EU budget in history.

After months of complex negotiations, the European Parliament finally approved the EU’s budget for 2014-2020 on 19 November 2013 (click here, for pages 1 to 31).  The budget regulation was approved by 537 votes to 126, with 19 abstentions.  The accompanying Inter-Institutional Agreement was approved by 557 votes to 118, with 11 abstentions.

Further Reading