Divided EU leaders to hammer out budget at February summit

As EU leaders gather for a crucial summit on Thursday, a radical rethink of the next seven year EU budget is needed, argues Margarida Marques. [Pool/EPA/EFE]

European Union leaders meet next month in Brussels to try to agree a first post-Brexit longterm budget, with divisions over proposed cuts that could undermine defence and climate change ambitions.

European Council President Charles Michel on Saturday (25 January) invited the heads of state and government of the bloc’s 27 member nations to an exceptional summit on 20 February.

Any further delay might jeopardise both current programmes and policies and the launch of new ones, he said.

“I am fully aware that these negotiations are among the most difficult ones we have to face,” he added.

“But I am also convinced that with common sense and determination we can strike a deal that will benefit all Europeans.”

Member states are divided on the bloc’s 2021-2027 long-term budget.

The battle of numbers that will shape EU’s future

It might not be the sexiest debate but how the EU will look in the next seven years will depend on the outcome of one of the toughest upcoming fights in 2020: the negotiation over the bloc’s next long-term budget. 

The talks have been complicated by the 31 January departure of Britain, which was the EU’s second-biggest economy and a major net contributor.

European Commission chief Ursula von der Leyen expressed concern in December about “severe cuts” in the proposed long-term budget plan from Finland, which holds the bloc’s rotating presidency, referring to their call for austerity.

Von der Leyen criticises Finnish presidency’s EU budget proposal

The new European Commission President, Ursula von der Leyen, did not mince her words at her first press conference on Wednesday (4 December), criticising a recent proposal of the Finnish EU Presidency for the bloc’s 2021-2027 budget and voicing concern “about the severe cuts in the proposal”.

Von de Leyen on 11 December launched the bloc’s new “Green Deal”, a key element of which will be a law committing member states to building a carbon-neutral economy by 2050.

“Some say the cost of this transition is too high: let us never forget what the cost of non-action would be. It is rising by the year,” she told the European Parliament.

EU to unveil trillion-euro 'Green Deal' financial plan

The European Commission will propose on Tuesday (14 January) how the EU can pay for shifting the region’s economy to net-zero CO2 emissions by 2050 while protecting coal-dependent regions from taking the brunt of changes aimed at fighting climate change.

Finnish cuts

Member states have been negotiating since mid-2018 on the basis of a Commission proposal calling for a multi-year budget of €1.134 trillion.

But the Finnish proposal slashes that to 1.087 trillion euros and, crucially, nearly halves the size of a Macron-backed European defence fund.

“I will not support a draft budget that does not live up to our ambition on this point,” Macron told reporters after a NATO Summit early December.

“On these new policies of defence, research, artificial intelligence (…), we need an ambitious budget, otherwise we are not coherent,” he added.

The Finnish proposal is intended to break the logjam, with net contributors such as Germany, Netherlands and other northern countries insisting on cutbacks.

But outnumbered eastern EU states have rejected the proposed cuts, worried about the special funds that have spurred their development since they joined the bloc.

The EU Cohesion Fund aims to raise the economies in the EU’s traditionally poorer southern and eastern countries to the higher western levels.

Farming subsidies, which with development funds account for the biggest share of the budget, are also slated for big cuts.

Michel, who was tasked at a European summit in December with advancing negotiations, urged all sides to “demonstrate a spirit of compromise” to reach an agreement.

Any deal they come up with will have to be ratified by the European Parliament.

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