The EU Budget – Are the differences too big to bridge?

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Wide differences remain, particularly between the wealthy countries that are net contributors to the budget and others that are net recipients of EU funds, and it is unclear when leaders will resume their negotiations. Time is short, as the next budget cycle runs from 2021 to 2027 and substantial technical work will be required after a deal is reached to avoid disruptions to EU program, POLITICO reports.

The Financial Times said that the EU’s search for a new budget foundered on Friday night after a near-30 hour summit ended with member states unable to bridge deep divides over how the bloc should finance itself for the coming seven years. Talks on the bloc’s €1tn budget in Brussels abruptly ended at 7.21pm after rival camps declared themselves to be at an impasse over the scale of cuts needed in the upcoming multiannual financial framework, and over the extent of rebates that will be pocketed by five rich EU states.

A group of four self-declared “frugal” net-paying countries, led by Dutch Prime Minister Mark Rutte, refused to raise the budget above 1 percent of the EU’s combined gross national income, a politically symbolic threshold that critics denounced as a pointless impediment to the bloc’s big ambitions on issues ranging from climate change to digital transformation.

According to the FT a terse final 25-minute discussion between leaders early on Friday evening was enough for all parties to realise that the game was up. Portugal’s premier Antonio Costa — who spoke on behalf of the 17 poorer countries that receive development funds — opened the discussion and emphatically declared that the summit could not continue. The compromise from the commission was “not viable” for a majority of member states, he said, according to diplomats in the room.

Negotiations on the budget are notoriously difficult and typically require more than one extraordinary summit. And this set of talks is especially difficult as the EU has lost the United Kingdom, a big budget contributor.

Mr Michel conceded that, like previous budget negotiations, there needed to be a summit that failed before leaders could come together to clinch a deal. “We tried to reconcile different interests, but we need more time,” he said.

“I believe that this has been a very important summit,” says Commission President Ursula von der Leyen. This is a budget discussions that takes place every seven years, and every time it becomes more complicated,” says European Commission President Ursula von der Leyen at the closing press conference. “You asked what happened … This is democracy. We have 27 different members states, with 27 different interests.”

 

Reactions 

French President Emmanuel Macron  – “We did not manage to reach an agreement, because, and we have to say it, there is not unanimity to back our ambitions with means,” said France’s Emmanuel Macron. “I deeply regret this.” (FT)

German Chancellor Angela Merkel – “I don’t even want to go into the details, the differences were simply too big and it did not succeed and therefore we have to continue working on it,” Merkel said. “Look — there was not even a detailed second proposal that I could tell you about, what that would mean for Germany.” (POLITICO)

German MEP Rasmus Andresen “The Council meeting was disappointing.” Andresen is a member of the European Parliament’s budget negotiating team, who pointed to “frugal countries together with the German government” as responsible for the lack of an agreement. “Instead of defining the future of Europe, many governments are just interested in fighting for a small national contribution,” he said, adding that “the European Parliament has to take the lead in defining the European Union, fighting climate change and tackling inequality.” (Politico)

Dutch Prime Minister Mark Rutte – “The traditional reasoning is that if you have ambitions … it always needs a lot of extra money” but the existing funds are growing “by a considerable number of billions … also in our proposals. It’s not a disaster” that EU countries didn’t reach an agreement this time around. “We’re not talking about a big economic crisis, or a big conflict in Libya, or a problem regarding Turkey. It’s, after all, about our money: It’s about 1 percent of Europe’s GDP. So it’s really not a disaster that things get stuck this once.” (Politico)

Croatian Prime Minister Andrej Plenković didn’t rule that a deal on the budget will actually be reached during the next presidency, when Germany will be in charge. Today’s debate “is a good start”. (Politico)

Italian Prime Minister Giuseppe Conte – “Italy has received a mandate together with Romania and Portugal to work on a counterproposal that is line with this more ambitious framework.”

Polish Prime Minister Mateusz Morawiecki – Poland has presented a plan “to change the philosophy of own resources,” stressing there are mechanisms that could put the burden of payments not on countries but, for example, on businesses. “Who’s against putting burden on big international corporations with a small fraction of percent of payment to the EU budget?” he asked rhetorically. “We talk about the digital tax, we talk about the single market tax … We present it [the solutions] as a mechanism that could help to break the impasse.”

Spanish Prime Minister Pedro Sánchez – Spain arrived at the negotiations seeking to “defend Spain’s interests respected in a stronger European Union” and that Charles Michel’s proposal had been insufficient to garner his support. “We have to do things better, and we cannot do them with far fewer resources,” he said. Sánchez criticized the rhetoric of the frugal countries during negotiations, and said some countries had sought to depict agriculture and cohesion as “old” and “bad” policies “when in fact they are among the ones most valued by our citizens, and the ones that most strengthen our common union.”

“In the past, it was always such. We needed two or three summits. I am hopeful to get a new breakthrough next time,” said Austrian Chancellor Sebastian Kurz.

The prime minister of Luxembourg, Xavier Bettel, whose country is also a net contributor, criticised the staunch opposition of these four countries to add more money.

Malta’s Prime Minister Robert Abela tweeted that more is needed to have a fair and balanced agreement for the EU 27 countries.

“My conception of the European project is different from the one put forward by [Dutch] Prime Minister Rutte, I see the EU as a chance and not as a bill”.

The European Parliament must also ratify any final budget agreement and for the moment, MEPs are far from happy.

“At the moment, we remain €230 billion apart,” European Parliament President David Sassoli, said this week.

Based on a review of FT / POLITICO / Euronews / Euroactiv 

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