Cyprus’ EU budget deal rejected by Commission, Parliament


In snappy terms, the European Commission rejected yesterday (30 October) the first proposals containing concrete figures for the EU's 2014-2020 budget presented hours earlier by the Cypriot presidency. The Parliament slammed the proposal for slashing spending on growth and jobs, while Sweden said much bigger cuts were needed.

Cyprus tabled a 46-page paper, called the ‘revised negotiating box’, which follows two previous versions issued by the Danish and the Cypriot presidencies. But this for the first time contains some concrete figures on spending for the 2014-2020 period.

The document proposes €50 billion in savings across all budget headings, or categories.

The presidency "believes that it is inevitable that the total level of expenditure proposed by the Commission, including all elements inside and outside of the MFF, will have to be adjusted downwards,” one official said. The MFF is the multi-annual financial framework, bureaucratic jargon for the EU budget.

A Cypriot presidency source said that “some member states” insist on a €200-billion cut from the €1 trillion proposed by the Commission – a position advocated by British Prime Minister David Cameron. Other countries, led by Germany, insist for a budget that amounts to 1% of the members’ GDP, which would require a cut of €130 billion from the Commission’s proposal (see background).

A Cypriot source insisted that despite the proposed cuts, “emphasis stays on growth and jobs”.  This statement could be challenged if the figures for such emblematic Commission programmes such as the Connecting Europe Facility (CEF), aimed at accelerating the infrastructure development in transport, energy and ICT, a cut.

Connecting Europe Facility gets the axe

Figures are difficult to compare with the Commission proposal. For example, the Commission proposes spending €376 billion for cohesion policy (including the CEF). The figure proposed by the Cypriot presidency is €326.5 billion, but it doesn’t include CEF. In the Cyprus proposal, CEF is in a separate sub-heading called “Competitiveness for growth and jobs”. The figure for CEF according to the Cypriot figures is €36.3 billion – the Commission proposed €50 billion.

According to the Cypriot paper, spending on the EU’s poorer regions is to be capped at 2.36% of a recipient country's economic output, down from the current 2.5%, which will raise eyebrows in the Union’s newer members.

In some budget headings it is easier to compare figures of the Cypriot proposal with that of the Commission. For example, the Commission proposal for the external relations budget is €70.2 billion, while the presidency’s proposal is €64.65 billion. In other areas, the calculation has been made more difficult.

“It is our secret”, a Cypriot presidency source said.

Outright rejection

The European Commission announced that it doesn’t support the negotiating box presented by the Cypriot presidency.

“The Commission remains committed to its proposal, which strikes the right responsible balance in times of crisis, both in the overall amount and in the balance between policies,” its statement reads. The next budget “needs to be a tool for investment in growth and jobs.”

The European Parliament stated that the presidency proposal “puts EU policies in jeopardy”.

Parliament rapporteurs Reimer Böge (EPP, Germany) and Ivailo Kalfin (S&D, Bulgaria) expressed “dismay” at the proposal and called it “a very bad signal”.

"We strongly oppose this development as it will inevitably put in jeopardy the future of certain key policies and programmes. We feel this will hamper the role of the EU budget as an instrument to generate economic growth and jobs," they said in a joint statement.

They think the presidency proposal "sends out a very bad signal when it comes to policy priorities, as the deepest cuts are made precisely in those policy areas that are considered vital for stimulating competitiveness, growth and employment." 

The rapporteurs state that the Cypriot proposal contradicts the European Council's 'growth and jobs compact' agreed at the 29 June EU summit. They state that under the proposal, CEF could never be realised over the next period. They also compared the 50-billion cut to a 60% reduction of the research programme, considered essential for stimulating innovation, competitiveness, growth and employment.

The Erasmus scholarship programme would suffer and also large-scale scientific programmes like ITER (nuclear fusion), GMES and Galileo will be put at risk, the MEPs state.

Swedish EU Affairs Minister Birgitta Ohlson was quoted as saying that no deal would be possible on the basis of cuts of only €50 billion and that reductions of “four times as much” a proposed by the Cypriots were needed “to stabilise member states’ contributions”.

What's next? 

Cypriot diplomats told EURACTIV they were not surprised by the reactions. Ambassadors of the EU member countries were scheduled to discuss the proposal today. Then, the Cypriot presidency will consult individually all member states and Croatia, which is due to join in July 2013. The discussion will continue at the level of European Affairs Ministers on 20 November, followed by the extraordinary EU summit on 22-23 November.

On the Parliament side, the negotiation team is preparing a position and will inform the Council prior to the November summit. Any decision that disregards the European Parliament's position could result in a veto by the EP, leaders have warned.

The European Commission presented on 29 June 2011 its proposals for the EU's 2014-2020 budget – the so-called Multi-Annual Financial Framework.

The Commission proposed raising the next budget to €1.025 trillion, up from the current €976 billion. This represents a 4.8% increase, which is beyond the average 2% inflation recorded in the last decade.

The European Parliament had said in a resolution on 23 October, adopted by an overwhelming majority, that even the original Commission proposal for a freezing of the budget at the level of 2013 ceilings would not be sufficient to finance existing policy priorities in the "Europe 2020" strategy, which comprises the new tasks laid down in the Lisbon Treaty, let alone any unforeseen events. 

The goal of the Cypriot presidency is to reach an agreement by the end of 2012, in line with the European Council conclusions of June 2012 [more].

  • 31 Oct: COREPER meeting to discuss Cyprus Presidency proposal
  • 20 Nov.: General Affairs Council to discuss EU budget 2014-2020
  • 22-23 Nov.: Extraordinary summit to discuss and decide EU budget 2014-2020

Cypriot presidency

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