Budget battle heats up as negotiators hit stalemate 

European Parliament President David Sassoli is expected to raise the issue of the EU's long-term budget during the EU summit on Thursday. [EPA-EFE/FRANCOIS LENOIR / POOL]

The European Parliament and the Council failed to make any progress on Wednesday (14 October) on the budget negotiations and accused each other of presenting misleading figures of the additional funds requested for the EU’s long-term budget.

The Parliament and the Council, which brings together the 27 member states, are conducting difficult talks to finalise the details of the multi-annual financial framework [MFF], the EU’s seven-year budget totalling €1,074 trillion for 2021-2027, and the €750 billion recovery fund, both agreed by the EU leaders in July.

The Parliament is pushing for increasing the MFF volume, after the leaders cut funds allocated to Erasmus, Innovation or Health, among other items. They also included the interest payments of the money borrowed for the recovery fund under the MFF ceiling.

The Parliament formally requested on Tuesday €39 billion in top ups for 15 spending programmes. According to their proposal, €22 billion will be ‘fresh money’, including €13 billion to cover the interests payment while the rest will go to reinforce the spending priorities cut in July.

In addition, MEPs proposed finding €17 billion for top-ups by moving funds between programmes in the EU budget, by making use of the margins for emergency cases, or by using revenues from fines that the EU would slap on companies.

Parliament wants to top up EU budget with €110 billion

The European Parliament on Monday (7 September) requested a €110 billion increase to the EU’s seven-year budget and legally binding commitments on the introduction of new levies to finance the bloc’s €750 billion stimulus against the COVID-19 crisis, EURACTIV has learnt.

Both sides disagreed on Wednesday over the volume of the Parliament’s demands. The German ambassador to the EU, Michael Clauss, said the Parliament’s proposal represented a €90-120 billion increase.

The Parliament questioned these estimates.

MEP Margarida Marques (S&D, Portugal), member of the Parliament’s negotiating team, told EURACTIV.com that “we are not demanding more money from the member states, that’s why this exercise is so difficult”.

She recalled that the interests payments, the bulk of the new money requested, will be covered by the new taxes that the EU intends to adopt over the coming years.

After the meeting, the Parliament’s chief negotiator, Belgian MEP Johan van Overtveldt, described as a “misrepresentation” the Council’s numbers, triggering a public spat on Twitter over the figures.

“Our constructive inputs have either not been read, or are deliberately misrepresented,” van Overtveldt said in a statement.

An EU diplomat told EURACTIV that “the Parliament didn’t appreciate that the Council ran through their figures” during the talks.

European Parliament walks out of EU budget negotiations

European Parliament budget negotiators walked out on Thursday night (8 October) from negotiations with member states and suspended all further talks until next week, saying they “will come back to the table once there is a real will from the Council’s side to find an agreement”.

The Council believes that the Parliament needs to clarify whether its priority is topping up programmes, covering the interest payments of the recovery fund, or increasing the spending ceiling.

Two diplomats from different member states were open to considering the reallocation of funds and the use of margins within the ceiling agreed in July. 

But almost all countries refused the idea of fresh money for the MFF. According to diplomatic sources, only one or two member states had spoken in favour of additional funds.

Germany, which is chairing the Council this semester, offered to move up to €9 billion towards the 15 priorities flagged by the Parliament within the existing ceiling.

The opposition to new financial contributions came not only from frugal countries like the Netherlands but also from member states that had been in favour of an ambitious EU budget in the past, like Spain.

A Spanish diplomat argued that EU leaders’ agreement in July was unprecedented, given that its firepower reached €1.8 trillion including the recovery fund.

In addition, Spain fears that revisiting the MFF ceiling would further delay the arrival of the recovery funds, now expected in mid-2021 if the talks do not go sideways.

Spain, one of the countries most affected by the pandemic, will be the second-biggest beneficiary of the recovery fund, after Italy, with €140 billion.

“We all know the limits we have,” a Spanish diplomat said in reference to the ceilings that the leaders had fought over during the five-day summit in July. And ”we don’t have much time” to conclude the negotiations, the diplomat added.

Parliament demands rule of law mechanism before signing off on EU budget

Leaders of the four major political groups in the European Parliament warned on Wednesday (26 August) that they would not sign off on the bloc’s next long-term budget unless there was a formal deal on linking EU funds to rule of law, in the latest signal that lawmakers would not back down on conditionality.

The talks are further complicated as both sides also need to agree on the new rule of law conditionality attached to the EU funds, a concept that countries like Hungary and Poland fiercely oppose.

Although it is not on the agenda, budget talks will probably come up during the EU summit in Brussels on 15-16 October. 

“If European Parliament President David Sassoli raises the issue on Thursday, then we may have a small discussion and clarify a few things”, for example the extra spending, an EU diplomat said but stressed there was little appetite among the capitals to add more funds to the MFF.

The increasing number of new COVID cases across Europe is also complicating the talks. Negotiators did not schedule a new meeting as the Parliament still does not know whether its plenary session will take place in Strasbourg next week. 

If that is the case, the negotiations would need to be postponed as the Parliament has limited the number of personnel traveling to the French city to limit infection risks.

[Edited by Zoran Radosavljevic]

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