EU budget hawks succeed in €960-billion cap

  

Budget hawks appeared to gain the upper hand in the latest budget draft presented by European Council President Herman Van Rompuy, cutting back still further a version of the 2014-2020 budget presented two months ago. 

The latest draft showed the budget had been capped at €960 billion, down from the €972 billion proposed by Van Rompuy in November. The latest figure amounts to 1.00% of EU’s gross national income.

Adjusted for inflation, the payments (actual spending) calculation would fall from €935 billion to €908.4 billion.

The slimmed-down proposal appears to be a victory for British Prime Minister David Cameron, who has held out for sharp reductions in spending at time when most national governments are producing austerity fiscal plans.

Sub-heading 1a (“Competitiveness for growth and jobs”) appears to be one of the biggest victims of the changes. The total level of commitments is now put at €125.7 billion, down from €152.5 billion in the earlier proposal.

The ‘Connecting Europe Facility’ (CFE) is slashed from €41.2 billion to €29.3 billion.

Sectors that have been affected include transport (from €26.9 billion to €23.2 billion) and energy (from €7.1 billion to €5.1 billion).

Three large infrastructure programmes variably changed include:

  • Galileo, from €6.6 billion to €6.3 billion;
  • GMES from € 4.9 billion to €3.8 billion.
  • ITER stays unchanged at €2.7 billion.

The sums allocated for nuclear decommissioning for the three nuclear plants in Lithuania, Slovakia and Bulgaria - which had to shut down reactors as part of their accession treaties - remain unchanged:

  • Lithuania is to get €400 million for Ignalina;
  • Slovakia will get €200 million for Bohunice;
  • Bulgaria will get €260 million.

Cohesion goes up

On Cohesion, the level of commitments receives a marginal increase, from €320.1 billion in the old proposal, to €324.7 billion.

Resources for “Investment for growth and Jobs” remain relatively unchanged at €312.8 billion.

In this figure, the subdivision is as follows:

  • A total of €163.094 billion for less developed regions, up from €161.43 billion;
  • €31.6 billion for transitional regions, up from €31.39 billion;
  • €50.34 billion for more developed regions, marginally dropped from €50.87 billion;
  • €66.36 billion for member countries supported by the Cohesion Fund, very slightly risen from €66.34 billion.
  • €1.39 billion for the outermost regions remains intact.

Figures for “European territorial cooperation” rise marginally to €8.948 billion, from €8.728 billion before.

The capping figure of cohesion funding to the least developed regions and member countries remains at 2.35%.

Special provisions

New paragraphs have appeared, favouring various regions in some member countries.

  • The more developed regions of Greece shall be allocated an additional envelope of €1.375 billion under the Structural funds, a rise from €1 billion;
  • The more developed regions of Portugal receive the same allocated €1 billion extra, of which €100 million for Madeira;
  • Spain’s allocation falls marginally from an additional €2.75 billion to €1.824 billion. Spanish territories across the Mediterranean Ceuta and Melilla will continue to receive €50 million extra;
  • The French outermost region of Mayotte continues to receive €200 million;
  • Hungarian less developed regions receive an allotment of €1.4 billion, replacing and increasing the Hungarian region Kozep-Magyaroszag’s allocated €1.2 billion;
  • The less developed regions of Italy receive €1.5 billion, up from €1 billion;
  • Malta and Cyprus continue to receive €200 million and €150 million respectively.

Additional new provisions are inserted to reflect “recent developments in their economy”

  • Belgium receives €100 million divided equally between Limburg and Liege
  • Germany receives €710 million; of which €510 million go to the “ex-convergence regions’, and the remaining €200 million to Leipzig;
  • The less developed regions of the Czech Republic receive an additional envelope of €400 million under structural funds;
  • The less developed regions of Slovenia receive an additional envelope of €75 million under structural funds.

The Youth Employment Initiative

Van Rompuy’s much touted Youth Employment Initiative receives €6 billion for the seven-year period, half from the European Social Fund, and half from a dedicated Youth Employment Budget.

Agriculture

Commitment appropriations for the heading “Sustainable growth: Natural resources”, which covers agriculture, rural development, fisheries and a financial instrument for the environment and climate action, remain substantially unchanged at €373.479 billion from €372.229 billion. Of this amount, €277.852 remains allocated to market related expenditure and direct payments.

The differences between the level of direct payments to agricultural producers between older and newer members remains unchanged. “All member states should attain at least the level of €196 per hectare in current prices by the end of 2020," the new version reads.

The rural development budget is €85.086 billion.

A new reserve is provided for crises in the agricultural sector of €2.8 billion.

And the victims…

Heading 3 – “Security and citizenship” is cut to €15.7 billion, compared to €16.7 billion in the former proposal.

Heading 4 “Global Europe” suffers a cut, from €60.667 billion to €58.767 billion. The figure for the Heading 5 “Administration” is cut from €62.629 billion down to €61.629 billions.

In addition all EU institutions undertake to reduce their staff by 5% over five years.

Significant pension changes for the administration are to be introduced, including a solidarity levy at a level of 6%.

The text concerning the rebates has changed. The UK retains its rebate unchanged. Denmark meanwhile receives a new annual rebate of €130 million, whilst the Netherlands’ €1.15 billion rebate is halved to €650 million and Sweden’s to €325 million is slashed to €160 million.

Positions: 

Reacting to the draft conclusions of the European Council on the EU long-term budget, which are disproportionately targeting EU development and humanitarian aid, Natalia Alonso, Head of Oxfam's EU Office, said:

"Cutting EU aid to save money is like cutting your hair to lose weight. It's not doing the job but worse, in the case of EU aid, it's put millions of people on the line.

“The disproportionate downsizing of the EU’s aid budget is a breach of faith. The proposed cuts to EU aid will leave a critical shortfall that could unravel the progress made so far and could have potentially disastrous consequences on the ability to achieve the MDGs, especially in Africa. It would undoubtedly also impact negatively on the role of Europe as a global player.

“EU leaders, like all other countries, should be held accountable for their commitments. It’s unacceptable for them to wriggle out of their promise to give 0.7 per cent of national income by 2015 to the poorest because there is an economic crisis."

Responding to the draft conclusions, Eloise Todd, Brussels Director of ONE, a global advocacy and campaigning organisation founded by Bono said:

“EU leaders have repeatedly promised to spend 0.7 percent of Europe’s income on smart aid, but they are far from reaching that goal.  The European Commission’s proposed budget for aid to the world’s poorest could see millions more children given access to vaccinations, primary education and clean drinking water, in other words, the chance of a better start in life.  In these last critical hours of summit negotiations leaders must have the courage to stand up for the world’s poorest.”

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