Cyprus presidency to start collecting wish lists for EU budget

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The Cyprus EU presidency will start consultations next week (9-15 July) with all member states on the next long-term EU budget, the country’s deputy minister to the president for EU affairs said yesterday (2 July). 

Andreas Mavroyannis gave a taste of the successive steps and expected difficulties in agreeing the Multiannual Financial Framework, or MFF, for 2014-2020.

The minister made reference to last week’s EU summit that decided that an agreement on MFF should be reached by the end of 2012. Before the summit, the Cyprus presidency had only said that it hoped to make as much progress as possible on MFF and achieve a “political agreement”, leaving the final work to the Irish EU presidency starting in January 2013.

MFF will be on the agenda of the General Affairs Council on 24 July, Mavroyannis said. Then, at the end of August, an informal gathering in Cyprus of the European affairs ministers would be entirely devoted to discussing the long-term budget, also including a session with the negotiating team of the European Parliament.

“We want this to be a moment of truth, when we are going to compare positions and try to come closer to a deal,” he told reporters as Cyprus took over the rotating Council presidency from Denmark.

‘Testing figures’ in October

Then, in September, for the first time, the Cyprus presidency may “try to test some figures”. The Danish presidency had the same ambition, but it proved “not possible” from such an early stage, the diplomat explained.

The aim, he said, is to have before the EU summit on 18-19 October the main elements to move forward, those being a political understanding amongst member countries and “at least” an implicit understanding with the European Parliament “on how, when and what”. 

This apparently implies not only the expenditure side but also the revenue side, the so-called “own resources”. Partly problematic is the decision-making process, which could prove tricky on the revenue side, as ratification by member states could be required if new resources are added – such as a financial transaction tax (FTT).

Countries’ positions on this topic were “very entrenched”, the diplomat said, adding that “own resources don’t need to be essentially an FTT”.

On the FTT, it is still unclear if at least nine member states will proceed with an enhanced co-operation and if a qualified majority of all 27 member states would agree to the procedure. The 28-29 June summit could not reach a consensus on the matter, with the summit conclusions announcing that "several member states will launch a request for an enhanced cooperation in this area, with a view to its adoption by December 2012."

Among other possible difficulties, Mavroyannis also alluded to the discussions on the correction of budgetary imbalances, jargon for the UK rebate negotiated by Margaret Thatcher in June 1984. He stopped short of speaking of reforming the common agriculture, fisheries and cohesion policies.

But correction mechanisms also apply for other net donors to the EU. A draft text says that all existing correction mechanisms will be replaced by annual lump sum reductions, with the following tentative figures: €2.5 billion for Germany, €1.05 billion for the Netherlands, €350 million for Sweden and €3.6 billion for the UK.

Another factor likely to further complicate the MFF negotiations appears to be achieving timely agreement with the European Parliament on the 2013 budget, Mavroyannis said.

The outgoing Danish presidency left behind a “negotiating box” of some 50 pages, as a non-binding document of an “evolving character”. It contains the main headings and sub-headings for budget expenditure, but as to the expenditure in each of the fields, it has only “X” signs.

On the budget income side, the large number of tentative formulations regarding “own resources”, in square brackets, attest of the deep divisions of the member countries. One of them reads: [A new own resource based on a system of financial transaction tax will not be introduced.]

Another example of the difficulties for filling in the blank spaces in the ‘negotiating box’ are clearly spelled in the document.

“The maximum total figure for expenditure for the EU for the period 2014-2020 is EUR X million in appropriations for commitments, representing X% of EU GNI and EUR X million in appropriations for payments, representing X% of EU GNI,” reads the paper.

The European Commission presented on 29 June 2011 its proposals for the EU's next seven-year budget  for 2014-2020 – 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 regional policy (or cohesion policy) of the European Union has the overall goal of promoting economic prosperity and social cohesion throughout the 27 members and their 271 regions.

Within the current financial framework (2007-2013), the budget for regional policy amounts to €347 billion, which is more than one-third of the overall EU budget during this period.

  • 24 July: General Affairs Council to discuss MFF;
  • 30 August: Informal GAC to discuss MFF;
  • September: Cyprus Presidency will “test some figures’
  • 18-19 October: EU summit to discuss MFF
  • 13 December: EU summit to reach agreement on MFF.

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