Georgieva optimistic about 2015 budget deal

Kristalina Georgieva [Georgi Gotev]

Kristalina Georgieva [Georgi Gotev]

European Commission Vice-President Kristalina Georgieva indicated that she was hopeful that an agreement for the 2015 EU budget, and the amending budget for 2014, could be reached with member states before the end of the year.

Georgieva, who is in charge of the EU budget and administration, met the press just ahead of another “trilogue” meeting with EU member states and the European Parliament.

On 28 November, the Commission presented a new proposal for the 2015 EU budget, after member states rejected it on 17 November. As overall figures, the new proposal is almost identical to the former one.

The new draft budget for 2015 foresees €145.2 billion in commitments (+1.8% on 2014) and €141.3 billion in payments (+0.7% on 2014. The formal proposal, which was rejected by member states, was of 145.6 in commitments and 142.1 in payments. Member states asked for the proposal to be slashed, even at the expense of key policy areas.

>> Read: Member states slash EU budget for growth and jobs, innovation

>> Read: 2015 EU budget in dire straits

Asked by EURACTIV why she thought that the new proposal will have a better chance than the previous one, Georgieva argued that inside the headings, the new proposal had taken into account the views of member states and of the European Parliament. It also reflected the priorities of the new Commission, and in particular the drive to boost growth, jobs and investments, she added.

“We built the 2015 budget proposal with the understanding that later in 2015 it would constitute the basis of the new investment plan presented by President Juncker,” Georgieva said, referring to the €315 billion package presented by Commission President Jean-Claude Juncker to MEPs on 26 November. The plan is expected to be endorsed by EU leaders on 18-19 December and to enter into force by mid-2015.

>> Read: Juncker: Christmas has come early, here is my big plan

Georgieva said that the final deal would be a package, including the draft amending budget for 2014, which is in trouble, as member states have rejected a proposal of the Commission to bridge the shortage of €4.7 billion in the 2014 budget using additional resources available in the EU budget, coming from fines.

>> Read: EU budget talks stalled, as net payers want their money back

She also said the Commission would play the role of “a honest broker” in the trilogue negotiations. In fact, the European Commission is more than a honest broker, because it makes the proposals according to the European Union’s priorities.

Georgieva said that in its new proposal, the Commission had cut commitments and has been able to find money to pay subsidies to the Union’s farmers without digging into the crisis reserve.

Regarding the draft amending budget, she said that member states had been reluctant to agree to make use of the so-called “contingency margin”, that is, to move allocations of payment credits from future years into 2014. The “contingency margin” is a last resort instrument to react to unforeseen circumstances, and amounts to 0.03 % of the EU’s gross national income (GNI).

Now the problem has been resolved, she said, and the Council had agreed that the contingency margin could be used. On that basis, the Commission could go for a tighter budget for 2015, but relying on a sizeable amount of additional payment credits in 2014.

Georgieva also said that the Commission had re-established investments in growth, jobs, competitiveness and innovation that the Council had wanted to be cut. She also said that the heading “Global Europe” had been beefed up, taking into account “how huge the vulnerabilities in the world we live in are”.

“When you take the new proposal for 2015, one could recognise that it is tuned more toward the priorities established by the Juncker Commission, and that in connection with the amending budgets, it gives us a very sound basis to move forward,” Georgieva said.

The Commission Vice-President argued that she thought an agreement would be reached before the end of the year, because the sides had been close to an agreement in the previous negotiations. What blocked them were not so much the numbers in play, but “issues of principle” – whether the so-called “special instruments” should be above or under the ceiling. She apologised for using too many technicalities.

“The clock is ticking. If we don’t get an agreement, we’ll be limping into 2015 with the so-called ‘provisional twelfths.’ Yes, we will continue to function, but it would be to the detriment of programs in their implementation that we would have to budget for every month, creating unnecessary disruptions,” she said.

The “provisional twelfths” mean that the budget appropriations for each chapter of the budget would be funded monthly by one twelfth of its 2014 budget or the relevant amount in the 2015 draft budget, whichever is less.

Even more important, Georgieva said, was the negative political signal which institutions would issue, in case of failure to agree.

‘On-purpose ambiguity’

Georgieva pointed out a political agreement from the period of negotiation of the 2014-2020 budget, that the so-called ‘special instruments’, that is, funding that is unexpected, like the Solidarity funds, or the Emergency aid reserve, should be outside of the seven year budget.

When the budget regulation was put into place, an “on-purpose ambiguity” was introduced, Georgieva said, the text saying that commitments should be above the ceilings. However, it said nothing about the payments, which opened the door for interpretations as to whether the payments for the special instruments should be above or under the ceiling.

Some member states, she said, took the view that those payments are under the ceiling of the €908 billion envelope for the present 7 year budget period.

But the European Commission, the Parliament and the legal service of the Council took the view that payments for special instruments actually can be placed above the ceiling.

It is this ambiguity that made it so difficult to reach an agreement in the trilogue, Georgieva explained.

“What we would do now is discuss and debate what we can do within this ambiguity”, the Vice-President added. 

At a summit on 8 February, EU leaders reached agreement on a €960 billion long-term budget for 2014-2020, representing the first net reduction to the EU budget in history.

After months of complex negotiations, the European Parliament finally approved the EU’s budget for 2014-2020 on 19 November 2013 (click here, for pages 1 to 31).  

€960 is the sum for commitment appropriations and €908 for payment appropriations.

The procedure regarding the EU annual budget is as follows: first the Commission presents the draft budget (done on 11 June this year); then the Council reacts; then the Parliament reacts. If the Council cannot agree to the Parliament's position, a 21-day conciliation procedure follows to find a compromise between the two institutions.

If the conciliation procedure fails, as happened in 2010, 2012 and this year, the Commission must present a new draft budget. This is what happened on 28 November.

>> Read: 2015 EU budget in dire straits

  • 31 December: Last deadline for the 2015 budget to be adopted.

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