Compromise in sight on 2011 budget

euro_coin03.jpg

The European Parliament has welcomed a draft compromise proposal by the European Commission on next year's EU budget, signalling that a deal is getting closer ahead of an EU summit on 16-17 December.

Following the Commission's presentation of a new draft budget for 2011 on Friday (26 November), Parliament President Jerzy Buzek said MEPs would do their utmost to reach an agreement before the end of the year, "so that by the beginning of 2011 all the EU projects and policies will be fully operational".

"This proposal appears to be a step in the right direction. The European Parliament will analyse it in depth," he said, adding that "if the European Union does not show sufficiently strong leadership, this would give negative signals to our citizens, but also to the markets".

"A non-decision is a very costly decision," Buzek stated.

The same idea was aired hours before by his Polish compatriot, Budget Commissioner Janusz Lewandowski, who said he was now optimistic that the EU institutions would find a compromise on the budget. Otherwise, he said, the bad signal would put even more at risk countries in difficult economic situations, such as Ireland.

Asked by EURACTIV to comment on rumours that an extra session of the European Parliament would be required on 22 or 23 December to endorse the decision taken by heads of state and government at the 16-17 Brussels summit, Lewandowski made clear that the decision would be adopted before the summit.

The Polish commissioner said he hoped EU member states, the Parliament and the Commission would approve the proposal at a 7 December meeting, allowing MEPs to vote on the budget at their Strasbourg plenary on 15 December.

This, he said, would give "a good Christmas message to the European Union". The EU summit's agenda would also be "relieved" of a difficult subject, he added.

Basis of the compromise

Up to now, the EU institutions have been at loggerheads over major subjects including the EU's multiannual budget for 2014-2020 and resources for new projects such as the future European diplomatic service.

On Thursday, EU member state ambassadors caved in to the Parliament's demands for so-called 'budget flexibility', a mechanism under which up to four billion euros are allocated each year to different projects with the approval of EU member states, voting by qualified majority.

The EU's contribution to the financing of ITER, an international project for nuclear fusion, was agreed in parallel with a total sum of €1.3 billion.

European Commission President José Manuel Barroso also proposed to delay the sensitive issue of "own resources" for the EU budget, offering to put on the table concrete proposals in June 2011. These could include various taxes, such as on CO2 emissions or an EU VAT.

In his letter, Barroso writes that the Commission is willing to examine how to strengthen the Lisbon Treaty priority areas within the 2012 and 2013 budgetary procedures.

"The Commission will fully take into account the financing of the EU new competences and needs stemming from the Treaty of Lisbon and of the objectives of the EU 2020 strategy, in view of its proposals for the next Multiannual Financial Framework," Barroso pledged.

If there is no agreement on the budget by 31 December, the EU would operate under a system of 'provisional twelfths' as of 1 January next year.

Under this scenario, each chapter of the budget would be funded monthly at one twelfth of its 2010 total, or even less if the amount in the draft budget is lower for that chapter.

Lewandowski said this would hamper the functioning of the EU, since any new initiative or body that did not have a budget in 2010 would not be funded. The Solidarity Fund and the Globalisation Adjustment Fund would be frozen, and generally-speaking, equal monthly budgets would prevent planning beyond one month ahead, he warned.

The EU budget is funded primarily by contributions from its member states.

The 2011 budget is the first to be negotiated under the Lisbon Treaty, which confers rights of co-decision to the European Parliament equal to those of member countries.

At an October EU summit, UK Prime Minister David Cameron won support from 11 member states – including Germany, France and the Netherlands – for capping the 2011 EU budget at 126.5 billion euros (equivalent to a 2.91% increase compared to 2010).

The European Commission and the European Parliament had originally asked for a 6.19% increase in order to make room for additional tasks handed to the EU by the Lisbon Treaty, including a new diplomatic service.

They finally accepted the smaller increase put on the table by the Council, but negotiations collapsed in mid-November over a number of political issues.

On 23 November, the Commission discussed a new draft compromise proposal, which complies with UK demands to cap any EU budget increase at 2.91%, but also includes a series of declarations over sensitive political matters such as new "own resources" for the EU budget, which the Parliament wants to see addressed in the negotiations against the will of member states.

  • 7 Dec.: Budget conciliatory committee meets, Brussels.
  • 13-16 Dec.: Parliament session, Strasbourg.
  • 14 Dec.: General Affairs Council, Brussels.
  • 16-17 Dec.: EU summit, Brussels.

Subscribe to our newsletters

Subscribe

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.