Special November summit to focus on long-term EU budget

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An extraordinary summit of EU heads of state and governments in November will focus on the European Union budget for 2014-2020, it emerged following a meeting of European Affairs ministers held in Nicosia yesterday (30 August).

Meeting in the Cypriot capital, the ministers held informal talks with leading lawmakers in order to smooth the decision process with the European Parliament, which is co-legislator on budgetary matters.

Also present were European Commission Vice-President Maroš Šef?ovi?, responsible for inter-institutional relations, and Commissioner Janusz Lewandowski, in charge of financial programming and budget at the EU executive.

“This is a watershed moment for the negotiations,” said Andreas D. Mavroyiannis, the Cypriot deputy minister for EU Affairs who chaired the meeting.

Mavroyiannis reported on the bilateral consultations which Cyprus has held with the remaining 26 EU members and Croatia, which is expected to join on 1 July 2013, collecting their “wish lists” for the next long-term budget, called Multiannual Financial Framework (MFF) in EU jargon.

“There is general agreement that the future MFF must contribute to growth, investment and jobs. Views also largely converge on the need to ensure a true quality of spending, the simplification of instruments and a sufficient degree of flexibility in a number of areas,” says a paper published on the Cypriot EU presidency website.

At the same time, the document recognises that “contradictory views” were expressed on many key issues.

“This applies in particular to the overall level of the MFF for 2014-2020," The paper states. "A number of delegations expressed the view that the EU budget should better reflect the fiscal consolidation efforts undertaken by member states at the national level and therefore requested a substantial reduction in the overall MFF in relation to the amount proposed by the Commission."

"A group of delegations, on the contrary, underlined the need for adequate financing of the Union’s policies and supported the overall amount proposed by the Commission and some an even higher amount. Furthermore, there were divergent views among member states as regards the composition of the MFF and in the event that cuts were to be made, opinions varied among delegations as to how much each heading/policy should be affected.” the Cypriot document says.

In addition to the overall level of expenditure, the Cypriot presidency said EU countries were divided on Cohesion Policy, the Common Agricultural Policy, access to the Horizon 2020 programme for science and research, the Connecting Europe facility on building infrastructure, and other policy areas.

Views also differ on the revenue side of the budget, with France taking the lead in supporting the Commission’s proposal for new "own resources", such as taxes on financial transactions. Germany, on the other hand, insists that the present system of own resources should be kept and even reduced, with national contributions remaining the biggest share of the EU budget.

A smaller budget

One of the important conclusions of the Cypriot presidency appears to be – despite the Commission proposals (see background) – that the budget should be smaller.

“The bilaterals have confirmed that an agreement cannot be found at the overall level proposed by the Commission in its proposals, as updated on 6 July 2012. The Presidency recognises that it is, therefore, inevitable that the total level of expenditure proposed by the Commission, including all elements inside and outside of the MFF, will have to be adjusted downwards,” the presidency document stated.

As to the different EU budget categories, the Cypriot presidency considers that readjustments and reductions are needed, including for programmes contributing for the fulfilment of the Europe 2020 strategy. On cohesion policy a “growing consensus” is noted for “downward adjustment”, while on agricultural policy “sharply opposite preferences” of member countries are indicated.

EURACTIV has learned that Germany has tabled a document calling for “better spending” of EU funds, providing for strict discipline and reporting, as well as for a substantial increase of “own funding” by member countries of projects receiving EU support.

Germany also foresees a strong conditionality on the release of EU funds with the country’s conformity with the requirements on economic governance, as well as with effective fight against corruption, tax evasion and money laundering.

The next step for the Cypriot presidency will be to present a revised version of the so-called negotiating box, including ranges of figures, some numbers to be communicated already in September. The previous Danish presidency left a negotiating box of some 50 pages, as a non-binding document of an “evolving character”. It contains the main categories and sub-categories for budget expenditure, but as to the expenditure in each of the fields, it has only “X” signs.

Work on two tracks

The Cypriot presidency “will also do its utmost to ensure that work on the sectoral legislative proposals will proceed as quickly as possible in parallel to the horizontal negotiation on the MFF”.

This means that work will continue on two tracks. The first one is on the 65 legislative texts, which will constitute the legal base of the new EU budget, while the second one is the concrete figures for every category and sub-category.

For deciding on the legal base, the European Parliament is involved as full co-legislator. The second part of the Cypriot meeting was held with the participation of MEPs Alain Lamassoure (EPP, France), chair of the Budget Committee; Ivailo Kalfin (S&D, Bulgaria), vice chair of the Budget Committee; and two Budget Committee members, Reimer Böge (EPP, Germany) and Jean-Luc De Haene (EPP, Belgium).

Speaking to EURACTIV, Kalfin said MEPs had held a “good and calm” discussion with the national ministers. He praised Cyprus for giving “a good dynamic” for the discussion to follow and expressed the hope that it the efforts are maintained, an agreement would be possible before the end of the year.

Kalfin cautioned, however, that while the Parliament was united in his positions on the MFF, the member states were quite divided. He also warned that the Parliament would not allow EU leaders to “set a fait accompli” by deciding by themselves, as it has been the case previously, before the Lisbon Treaty was adopted giving the Parliament expanded powers over the budget.

On 3 September, President of the European Council Herman van Rompuy announced the date for the special summit.

"I decided to convene a special #euco on 22/23 November to discuss the EU's future finances with EU leaders #MFF," van Rompuy tweeted.

Commissioner for financial programming and budget Janusz Lewandowski's spokesperson Partizio Fiorilli said at a press briefing:

"Around 20 member states who believe that the Commission's proposal is a sound one. Some think it's not a good one because it has to be higher in their view. And then we got 6-7 member states who hold the view that we need to have cuts. Those are the main conclusion's from what I have got that happened in Nicosia yesterday."

Fiorilli continued: "Increases in the budget do not correspond, at least in my view, to the increase in the size of the EU. if you look at other periods like 2010, national budgets in all member states had increased by 62%. Over the same period, the EU budget increased by 38%. So if you compare that plus the fact that the percentage of the EU budget in relation to GNPs of member states which is down every year means we can do more Europe with less."

"But there are limits. If member states keep asking us to do more and create agencies which will supervise financial matters, three new agencies, we need extra people to do all this. And you need a minimum of resources," Fiorilli added. 

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 goal of the Cypriot presidency is to reach an agreement by the end of 2012, in line with the European Council conclusions of June 2012.

  • 18-19 Oct.: Summit to discuss economic governance
  • 22-23 Nov.: Summit to discuss long-term EU budget for 2014-2020
  • 13 Dec.: Summit expected to agree on 2014-2020 budget

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