Brussels, 16/11/2010 (Agence Europe) - Europe is entering a budget crisis following the breakdown in the early hours of Tuesday 16 November of the conciliation process on the draft 2011 EU budget. The EU Council of Ministers and the European Parliament have not been able to reach agreement on the total budget or on other issues that the EP wants to bring up, like new sources of EU funding, the financing of new EU policies and preparing for the next multiannual financial framework. The United Kingdom, the Netherlands and Sweden are the most intransigent countries with respect to the EP's demands, arguing that there is no reason at this stage to discuss anything other than the budget for next year.
The European Council of 16 December will discuss the matter and try to avoid the EU's new plans being kept on hold for months while the finances are sorted out. Failure to agree on the draft 2011 budget means that the EU will have to use the provisional twelfths procedure from 1 January 2011 onwards that fixes EU funding, month-by-month, at the 2010 level until a budget for 2011 is agreed upon and adopted. This would delay the financing of the expensive new projects and initiatives planned for next year, like the new European diplomatic corps (European External Action Service, EEAS, which will not be able to recruit staff), the ITER experimental nuclear fusion project (€940 million of the €1.2 billion will be lacking), the new financial surveillance agencies (the €1.2 million for running the agencies will be lacking), and the 14% planned rise in the Structural Funds. Moreover, the member states will have to come up with €24 billion in farm spending as direct farm aid. EU Agriculture Commissioner Dacian Cioloº said that the farmers should not have to suffer because of the lack of budget as the member states should provide them with the direct EU aid in the meantime.
As foreseen in the Lisbon Treaty, the European Commission will rapidly submit a new draft EU budget for 2011, but this will not prevent the provisional twelfths coming into effect. It has already been used on two occasions in the past, for the EU budget for 1980 and for 1985.
The president of the European Commission, José Manuel Barroso, said that he regretted that a small number of countries were not prepared to negotiate in a European spirit, and given the advanced stage of the negotiations and the progress that had been made it should have been possible to find a solution last night. A Commission spokesperson, Pia Ahrenkilde Hansen, explained that he was referring to the European “spirit of compromise”. Barroso said that people who think they've won one over Brussels are shooting themselves in the foot because they benefit from European programmes, and citizens, companies, local authorities, cities regions and rural communities will feel the impact of this inability to strike agreement. The Commission is already working on a new draft budget in order to find a rapid solution.
Promising to get to work immediately on a new budget, EU Budget Commissioner Janusz Lewandowski said he expected the entire process to take a few months. It is highly regrettable, he commented, explaining in a press release that the EU budget is not for Brussels but for European citizens through the European Union. The breakdown in conciliation will delay the funding of important initiatives and investments in EU member states, he added, pointing out that 90% of the EU budget finances investment that creates jobs and growth. Measures to encourage economic growth, research and development in the member state will now be delayed.
At a press conference after the conciliation meeting, the Belgian budget minister Melchior Wathelet said that the conciliation process had been followed to the end (midnight on 15 November), but agreement was not reached. The various EU institutions were, however, able to agree on the actual financial details of the 2011 budget, he explained, namely a 2.91% rise in payment appropriations compared with the 2010 budget to €126.42 billion, 1.01% of the EU's gross national income (GNI).
Wathelet said that the European Parliament had wanted to link negotiations over the 2011 budget with other issues, like flexibility in the review of the current multiannual financial framework, and how the EP is to be involved in debates on the next financial framework (2014 and beyond). The Belgian Presidency and the Commission came up with draft statements to this effect, explained Wathelet, but it was not possible to reach agreement because the EP would not accept the proposals from the Council.
The draft statement on the multiannual financial framework, that was the lowest common denominator because of the hard line taken by the UK, the Netherlands and Sweden, only mentioned Articles 312, paragraph 2, of the Lisbon Treaty (the Council would unanimously pass a regulation setting the multiannual financial framework after approval by the EP), 324 (regular meetings of the presidents of the EP, Council and Commission would be convened by the Commission; the presidents would take all measures needed to promote negotiations and approximation of the institutions' views) and 312, paragraph 5 (throughout the procedure leading to adoption of the financial framework, the EP, Council and Commission would take any measures needed to facilitate adoption). The Commission also prepared three draft recommendations on own resources (EU funding), European value-added and “Lisbonising the Treaty”. Wathelet said that the Council had pointed out that it was prepared to discuss flexibility and the ITER project, but despite these pledges from the Council on the different topics, the EP had not been able to agree to the various proposals from the Council.
Melchior Wathelet conceded that Article 315 would be used by the Commission to continue its budget work based on the provisional twelfths rule, but a number of important aspects of the 2011 budget would now be on hold.
At a press conference, the president of the EP Jerzy Buzek regretted that a small minority of countries had blocked the agreement by not wanting to engage in constructive talks with the European Parliament on implementation of the Lisbon Treaty. He said the EP had submitted by very moderate position and had not called for a single euro more than the Council was suggesting. The only EP condition was to have serious agreement on the rules and procedures, in line with the Lisbon Treaty, to avoid budget crises in the future, but he said the Council was not ready for agreement. Buzek said the EP had done its best to agree on a budget before the end of the year.
Alain Lamassoure (EPP, France), chair of the EP's budgets committee, said that the EP wanted the 2011 budget to be accompanied by political agreement on the future funding of the EU. Lamassoure said that the EP had two demands: 1) preserving the current flexibility that allows extra money to be added to deal with emergencies (that the Council wants to scrap) and; 2) opening a debate on how to fund the new policies that the Lisbon Treaty makes possible, along with the EU 2020 strategy. Lamassoure said the budget crisis only demonstrates what everybody knows - that the crisis of the own resources system of the EU budget means that no member states these days want to fund the EU's budget. The EP says that to secure the funding of European policies, a discussion is needed on new ways of funding the EU, but a minority of member states has made negotiation impossible, added Lamassoure, hoping that the EP could be able to continue the negotiations with the European Council on 16 December. (L.C./transl.fl)