Hollande seeks to defuse European Parliament time bomb

Hollande in EP.jpg

French President François Hollande positioned himself as a promoter of growth and solidarity and tried to woo MEPs on the EU's long-term budget as he spoke to the European Parliament in Strasbourg yesterday (5 February). EURACTIV France reports.




In an unusual move, Hollande went to Strasbourg to debate with MEPs ahead of the 7-8 February summit, which will seek a compromise on the EU's 2014-2020 budget.

France ready to accept lower funding from CAP?

Hollande posed as a defender of growth and European solidarity. He objected to the northern states of Europe – Germany and the United Kingdom in particular – which are fighting for cuts to the European budget, in line with their national austerity policies.

Speaking in defence of European solidarity, Hollande reaffirmed his position against the UK rebate.

"The amount of rebate cheques must end," he stressed, adding that "a compromise is possible" but that "it will be necessary to bring to reason those who want to amputate the EU budget beyond what is possible".

Like other countries, France has sought to defend its interests and is fighting to preserve the Common Agricultural Policy (CAP), which benefits it the most. As the leader of the Green/EFA group, Daniel Cohn-Bendit, put it: "CAP is the French rebate”.

In what could be a breakthrough, Hollande suggested that Paris would be ready to accept a reduction in the CAP budget for 2014-2020.

"France is not ready to sacrifice growth policy for the Common Agricultural Policy," the French president said, suggesting both were equally important.

Where is the Growth Pact?

Hollande pointed out that redressing public finances was possible only on the basis of a revival of industrial activity and public investment.

However, many MEPs were left perplexed by the European Growth Pact, which Hollande negotiated in June, and which mainly consists of funding from the European Investment Bank and the EU’s structural funds.

"I'm looking very hard to find them … Where are those billions?”, said Joseph Daul, the leader of the centre-right European People's Party. The same question was echoed by Cohn-Bendit, reflecting a view widely shared across party lines.

The next budget 2014-2020 and its structural funds will be the main tool to support European growth, Hollande stressed. But he omitted to say that these are instruments that would have been mobilised anyway, with or without the Growth Pact.

"I heard the European Parliament express the wish there should be a proper level of expenditure … I feel accountable to the Pact adopted in June," Hollande said, confirming the impression that he relies on expenditure already planned, presenting it as a new stimulus plan.

100 billion less

While the French discourse on the budget sounds different from that of Germany’s, the numbers both countries have in mind are very close. "If we think that the priority is to preserve the common policies, we can have €960 billion," he said.

This amount corresponds to the German proposal, which circulated before the 22-23 November EU summit. That is to say, €13 billion less than the €973 billion proposed by European Council President Herman Van Rompuy. And more than €100 billion less compared to the original text of the Commission.

>> Read: The EU's new budget blueprint in figures

MEPs have thus played the role of defenders of a Union that must give itself the means for its ambitions. Under the Lisbon Treaty, MEPs now have the opportunity to approve or reject the EU budget adopted by EU heads of state and government as a whole.

Veto threat

Slamming the ridiculous budget proposal, MEPs have threatened to veto the eventual agreement and expressed a preference for the EU to work on the principle of monthly payments per year for two years, to the level of the 2013 budget, pending a settlement of the crisis.

"The current proposal is a renunciation of politics, and I'm telling you right now, we will reject it, Mr. President," Daul said.

"After the speech of Joseph Daul, I wonder that you will still discuss on Thursday and Friday,” said the leader of the liberal ALDE group, Guy Verhofstadt.

"We cannot find a compromise for the multi-year budget," Cohn-Bendit stated.

"Our answer too is no", French Socialist MEP Catherine Trautmann said, regretting the lack of solidarity in the proposals.

If the votes of the eurosceptic and anti-European MEPs were added, it appears that the budget could be shelved.

Parliament to make U-turn ?

The French president, however, positioned himself as an ally of the European Parliament, considering that its position was "not so distant" from his own views.

Hollande even said that the threat of veto wielded by the Parliament could be a "positive factor” for making EU heads of state and government better aware of the stakes.

"Sometimes at the table of the Council, I hear that we would play a trick on the political groups of the European Parliament, Hollande said. I believe that this will not be the case this time,” he added.

Used to hearing Parliament barking without biting, EU heads of state and government risk this time not to take the threat seriously, EURACTIV France concludes its article.

Germany insists on a further reduction of the next EU budget that should not exceed 1 percent of the EU's GDP. Michael Link, Minister of State at the Federal Foreign Office, told EURACTIV Germany in an exclusive interview ahead of this week's European Union summit.

“All partners in the Council still have to move. The overall volume of the financial framework still has to be reduced”, Link said. He argued that all member states currently try hard to consolidate their respective national budgets.

“At the same time we want a modern budget with a clear focus on growth and strengthened competitiveness. The scattershot approach of distribution of funds is not suitable anymore. If we invest the available funds in a smarter and more targeted way, we can limit the EU budget to 1% of the EU's GDP and transform it into a real growth program for Europe”, Link said.

The German official explained that Parliament’s main demands in the current budget negotiation – introduction of new own resources and more flexibility within the EU budget – “certainly still need to be discussed more”. “It is well know that the Federal government rejects the introduction of new own resources for the EU. From our point of view the EU budget has not a funding problem”, Link said. New own resources would make the already complicated EU budget even more complicated, he added. Germany’s refusal of new own resources included the expected revenues from the common financial transaction tax.

“The financial transaction tax revenue is already included in the Federal budget. As I said before: From the viewpoint of the Federal government the EU budget does not need new own resources”, Link said. The Minister of State also rejected the idea of more flexibility within the EU budget, as MEPs have asked unspent EU money to be re-injected in the budget, instead of being returned to the member countries. The EU budget already has good rules to ensure EU’s ability to respond, he said.

“We should not forget that the financial framework is linked to the setting of political priorities and planning reliability. This must not become random by the possibility of later interventions”, Link told EURACTIV Germany.  

The European Commission proposed a draft budget for 2014-2020 which represents a freeze in spending in spite of the Union having gained new competences under the Lisbon Treaty.

The Cypriot presidency tabled a proposal, flatly rejected by the Commission and the Parliament. Then followed another proposal by Council President Herman Van Rompuy.

The 22-23 November 2012 summit ended without an agreement, as some leaders reportedly tried to slash further Van Rompuy’s latest budget proposal (of €973 billion) by an additional €30 billion.

EU leaders are expected to have another summit on 7-8 February with the objective of agreeing the 2014-2020 EU budget.

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