European Parliament walks out of EU budget talks

Martin Shulz.jpg

Negotiations between the European Parliament and Council over the EU's 2013 budget broke down yesterday (13 November) when lawmakers walked out of the talks. The development doesn’t bode well for next week’s extraordinary EU summit for the 2014-2020 budget.

European Parliament President Martin Schulz pulled his negotiating team out of key talks due to be held Tuesday night.

Schulz announced the move in a statement, just hours before the talks were due to begin on plans for EU spending in 2013.

“EP negotiators will not attend the meeting with Council on the budget 2013 scheduled for tonight, because there is no agreement among the member states about a supplementary budget for the current year [2012]. These funds are needed for the European Union to respect its legal obligations, i.e. to pay for bills incurred for goods, works and services delivered,” Schulz said.

In another statement, Alain Lamassoure, chairman of the Parliament's budget committee, said that given “the current impossibility in which [members states] find themselves to solve the problem of the 2012 outstanding balance, the European Parliament cannot continue the budgetary negotiation on the 2012 budget.”

EU coffers ran empty under the 2012 budget for programmes that include priority areas such as education, youth and research. On 23 October the Commission tabled a remedial budget demanding further contributions from member states to safeguard the programme in the 2012 EU budget, to the amount of roughly €9 billion (see background).

Schultz insists that the €9 billion supplementing the 2012 budget should not even be a matter for debate.

Now the Commission has to make a new proposal and the negotiations can start again. If there's still no agreement, emergency procedures will be put in place under which the EU will be able to spend one-twelfth of this year's budget each month.

The European Parliament is involved as a co-legislator for the 65 legislative texts, which will constitute the legal base of the new EU budget. However, with regard to the concrete figures for every category and sub-category, EU leaders have the full power to decide.

November budget summit: mission impossible?

With talks on the 2013 budget stalled, European leaders should find it even more difficult to agree on the long-term EU budget for 2014-2020.

EU leaders are due to meet on 22-23 November for an extraordinary summit to debate and possibly agree on the 2014-2020 EU budget.

The budget talks will be based on a European Commission proposal, presented in June last year, which suggested raising the next seven-year budget to €1.025 trillion, up from the current €976 billion.

A diplomat, who was speaking to the press on condition of anonymity, recently described the EU budget debate as being dominated by the seven or eight net contributor countries, with the Cypriot EU presidency following their positions blindly.

Faced with a veto threat from Britain, which called for a de-facto budget freeze, the Cypriot presidency proposed to reduce the Commission's budget recommendation by €50 billion across all categories.

According to EURACTIV France, Council President Herman Van Rompuy could propose even deeper cuts, aimed at satisfying Germany, which pleads for a budget of around €960 billion, equal to 1% of the EU’s GDP.

‘Friends of cohesion’ get support from Parliament

Schulz hosted a meeting yesterday with leaders from 16 European countries in support of the EU's "cohesion policy", which redistributes funds to the bloc's poorer regions in order to support their economic development.

The "friends of cohesion” meeting was attended by the leaders of Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain. Representatives from the employers' organisation BusinessEurope, the European Trade Union Confederation (ETUC) and the European Association of SMEs were also present.

Schulz said that while the idea of cutting the EU budget may be popular in some countries, it could be counter-productive to stimulating the economy and creating jobs. The two co-organisers of the meeting, Polish Prime Minister Donald Tusk and his Portuguese counterpart Pedro Passos Coelho, stressed that the EU's cohesion policy, supporting economically less-developed regions, can be the best policy in times of crisis if it goes hand in hand with better spending.

European Commission President José Manuel Barroso, who also attended the meeting, pointed out that cohesion policy means growth and investment for the EU. He expressed hope that these arguments will be heard at next week's summit and that member states will come to an agreement on the long-term budget, which would be then approved by the EP before the end of the year.

Commission President José Manuel Barroso stated at his meeting with the “Friends of cohesion”:

“I've seen in the last days interesting developments, for instance European scientists and artists that have mobilised to defend our "Erasmus for All" proposal. Researchers, Nobel Prize winners of science, mathematics, medicine, physics, that are asking the governments of Europe to support our proposal for "Horizon 2020", the investment in research and innovation. Most prominent business leaders have spoken out in favour of the Commission's plan to invest in strategic infrastructure in transport, energy and internet [the so-called Connecting Europe Facility].

“I hope that these arguments will be heard in the European Council. I hope that in the European Council the Heads of Government will not only consider in a narrow way what they define as a national interest. That they are able to think European and how much it is important to reach a consensus on a budget for Europe."

The Green/EFA group hit at the development, with budgetary spokesperson Helga Trüpel stating:

“The blame for the breakdown rests solely at the door of Council, which has acted totally irresponsibly in reneging on its commitments with regard to this year's budget.

“The shortfalls faced by key European social, research and cohesion programmes under this year's budget are not due to new or disproportionate budget lines, they are merely a function of the EU budgetary cycle and commitments agreed to by Council last year. The Council is duty-bound to ensure the EU budget can deliver the commitments it has made. Ultimately, it is beneficiaries in EU member states that will suffer due to this funding shortfall, notably in crisis-hit countries, making Council's irresponsible position all the more incomprehensible.

“Parliament has made clear it will not accept the arbitrary slashing of the proposed EU budget for next year, which is being pushed by EU governments in Council. The EU budget is the best placed instrument for stimulating economic recovery across Europe but this implies allocating an appropriate level of resources to R&D, structural funds and other economy-stimulating measures. The Commission's revised proposal should reflect this.”

The Alliance of Liberals and Democrats for Europe said it was appalled by the behaviour of the Council on the 2012 and 2013 budget negotiations.

Jan Mulder (VVD, Netherlands), ALDE coordinator in BUDG, said: “In fact, the Council is using their cynicism on the2013 budget negotiations, as well as on the corrigendum to the 2012 budget year, to pollute the negotiations on the Multiannual Financial Framework 2014-2020. All financial outlooks for the coming period and the European Commission's assumptions are based on the figures of the 2013 budget which the Council seeks to reduce. It's a futile way to negotiate and the Parliament will take this into account both in the annual procedure, and in its approval of the MFF.”

ALDE spokeperson for annual budget, Alexander Alvaro (FDP, Germany) added: “I am deeply disappointed that the Council have allowed negotiations to fail again today. The Member States of the EU have to be aware of what is at stake. The failure of the negotiations not only means that the EU is facing major difficulties in meeting its payments obligations. In addition, the European Commission - should no solution have been reached by midnight tonight- will have to submit a new draft budget for 2013.  Given the position of the Member States, we are in a rather difficult situation, which means I can only appeal to the Council to come to the negotiating table with good judgment and common sense. An agreement is in the interest of our citizens, we should not have to leave things without an accord on how to pay the bills."

Richard Ashworth, leader of the UK's Conservative MEPs and a key British negotiator in the talks, described Schulz's move as "impetuous and unhelpful".

He said: “There needs to be a realisation in times of extreme economic hardship that Europe's taxpayers cannot be railroaded into paying more every time the hat comes round. Putting a gun to the heads of member states and demanding nine billion euros is foolish and wrong.

“That remains true whether Mr Schulz chooses to remain in the room or not.

“This crisis requires calm heads, open ears and an understanding of political reality. Instead we have abrasiveness and flexing muscles, which will help nobody.”

In the EU budget for 2012, coffers ran empty for programmes that include priority areas such as education, youth and research.

The Commission said it was not surprised by these developments.

When the EU budget for 2012 was adopted in November 2011, Budget Commissioner Janusz Lewandowski pointed out that the Parliament and the Council had agreed on a budget much lower than the one proposed by the Commission.

In April, the Commission defended plans to increase the bloc's spending for 2012 by 4.9%, arguing that the proposal struck a balance between austerity and the need to boost growth. The proposed 2012 budget was of €132.7 billion, but the one that was eventually adopted was €129.1 billion.

Accordingly, on 23 October the Commission tabled a remedial budget demanding further contributions from member states to safeguard the programme in the 2012 EU budget.

The EU executive is calling for a whopping €8.9 billion across the total budget to finish off the 2012 year, while earmarking some €180 million for the Life-Long Learning Programme, made up principally of Erasmus. Half of that amount, €90 million, is demanded for Erasmus (>> Read Commission Memo).

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