Brussels, 21/11/2011 (Agence Europe) - After 16 hours of tense negotiation, the governments of the 27 EU member states and the European Parliament (EP), meeting in Brussels, reached agreement at 3 o'clock on Saturday morning on an EU 2012 budget which reflects the rigour that is required in public expenditure in these times of crisis. In terms of payment appropriations, next year's European budget will be €129.08 billion, an amount corresponding to 0.98% of EU gross national income (GNI) - so less than 1% - and an increase of 1.86% on the 2011 budget. When the expected inflation for 2012 is factored in, the EU 2012 budget is effectively lower than the 2011 budget.
The EU is going to have to tighten its belt, to such an extent that further money will have to be found to fund needs. The EP delegation agreed to a budget in tune with the climate of austerity in exchange for a number of concessions - on commitment appropriations (€147.2 billion, €1 billion more than the Council's position in July) which will allow it to fund a number of its priorities, and on using the flexibility instrument (a mechanism which allows the ceilings in the multiannual financial framework to be exceeded by up to a maximum of €200 million). The EP and the European Commission wrung a political commitment from governments that additional funding will be made available in 2012 if necessary.
Uniting rigour and future expenditure. “The points of the agreement relate to the 2012 budget and the amending budget to the 2011 budget”, said Polish Deputy State Finance Secretary Jacek Dominik, who chaired the meeting. He pointed out that the compromise on the 2012 budget had been agreed “unanimously” by the Council.
“It's a compromise which does not fully satisfy anyone, but in the very difficult situation in which the EU finds itself today, there was a willingness from every quarter and from the very start to reach agreement to show that the 27-member EU is working and that we can reach the very difficult agreement that is needed by the EU at the moment”, said Alain Lamassoure, chair of the EP budgets committee. Budgetary rigour and retention of investment and future spending had to be reconciled “and on that the EP was insistent”, he added. Rigour is being applied to the operating budget of all administrations (in the institutions, there is a rise of only 1% compared with 2011, which equates to a real terms reduction on 2011) and most Community agencies. The EP made sure, however, that the new financial agencies receive funding in line with Commission proposals and that the Frontex agency and refugee aid agency have their funding increased in view of the requirements that have appeared this year (following the Arab revolutions). The EP insisted that efforts to provide additional funding be made on future spending related to the research framework programme and the lifelong learning programme, and on spending related to EU action throughout the world, for example, to deal with events on the other side of the Mediterranean. “We achieved a balance which is the least bad solution possible today”, said Lamassoure in summary.
“Harmful” disparity between commitments and payments. Lamassoure was concerned at the risk that would be run if the policy (embarked on by the Council last year and continued this) of restricting payment appropriations as much as possible and allowing commitment appropriations to rise a little were to continue. “It can be done for two or three years but, if it goes on longer, we could find ourselves with a very harmful imbalance between commitments and payments. There would be a serious risk that major programmes might have to be suspended for want of payments”, he argued.
“Agreement is better than disagreement”, said Budget Commissioner Janusz Lewandowski. He harboured mixed feelings on the agreement reached as, “with this low level of payments, there are growing risks of not paying the bills next year”. The commissioner also spoke of an austerity budget.
EP rapporteur on the 2012 budget Francesca Balzani (S&D, Italy) said that this was the first budget in real support of the EU 2020 strategy for growth and innovation. The agreement also contains a considerable allocation for immigration policy, she added.
Total defeat for EP and Commission? Lamassoure does not share this opinion. “If, for the second consecutive year, we have agreed to the figure the Council wants in payments, it is because everyone knows, and no one can challenge it, that the Council figure is the most it can give”, he said, acknowledging that realism had won the day. He regretted, however, that “the funding of the European budget is at the mercy of the budgetary situation in the least well managed European countries which now have to make the greatest savings because they wasted money a few years ago”.
It was for that reason that the EP has been fighting for years for a return to the letter and spirit of the treaties which make provision for the funding of European expenditure by fiscal resources assigned directly to the EU. The European Commission has tabled proposals on new own resources (designed gradually to replace national contributions), which is a source of joy to MEPs, even though discussions in the Council are proving very difficult, particularly on the financial transaction tax.
“Even in times of austerity, the bills have to be paid”, added commissioner Lewandowsky. He was critical that the European budget had been held “hostage” by the financial problems of certain EU countries.
The link between Community spending and possible savings in national budgets has to be recognised, Lamassoure stated. “The EU is a public money saving machine”, he said, as it allowed money to be pooled, made it easier to attain the critical mass in areas such as research and to make savings. A bigger EU budget is good news for Europeans, he suggested.
Dutch Finance Minister Kees de Jager set the tone on his arrival in Brussels on Friday morning. “The Council has agreed to a 2% increase in spending, in line with the inflation forecast for 2012. Throughout Europe, governments are adopting austerity measures and are making budget cuts. It would be rather strange if the European budget were to rise”, he stated.
The Council won the battle on payment appropriations, securing a margin of €12.4 billion in 2012 below the payments ceiling of the current multiannual financial framework to cope with unforeseen situations. At the same time, it allowed targeted expenditure to support measures enhancing growth and employment in order to prevent the EU from slipping further into crisis.
With regard to commitment appropriations (€147.2 billion), the margin below the ceiling is €1.2 billion.
The main points of the agreement reached according to 2012 budget headings are as follows:
Sub-heading 1a (competitiveness for growth and employment). Commitments were set at €14.8 billion, using the flexibility instrument for €50 million. Payments were set at €11.5 billion. €100 million in commitments has been allocated to the International Thermonuclear Experimental Reactor (ITER). Additional needs are estimated at €1.3 billion for 2012 and 2013. The Council and the European Parliament also agreed a joint statement on financing the remaining part of the additional needs for ITER and a trialogue meeting will take place on 23 November to try to find common ground before the end of the year.
Increases in funding were agreed for: 7th Research and Development Framework Programme (€92 million more than in the Commission proposal), lifelong learning (€52 million) and Erasmus Mundus (€1.9 million).
Sub-heading 1b (Cohesion for growth and employment). Payment appropriations were set at €43.8 billion (€52.8 billion in commitment appropriations, leaving a margin of €8.4 million).
Heading 2 (Preservation and management of natural resources). Commitments were set at €60 billion, leaving a margin of €834 million, and payments at €57 billion. The agricultural amending letter, No 3/2012, was approved which meant a reduction of €85.7 million in commitment appropriations and €83.4 million in payment appropriations from the draft 2012 budget. Also agreed were increases compared with the draft budget of €9 million for the school milk scheme and €131 million for clearance of accounts. The Conciliation Committee (Council/Parliament/Commission) agreed on a joint statement on preventing measures for future crisis in the fruit and vegetable sector (but there was no agreement on increasing funding in the way the EP would have preferred)
Sub-heading 3a (Freedom, security and justice). Commitment appropriations were set at €1.4 billion, leaving a margin of €38 million, and payments at €836 million. Compared to the draft budget, commitment appropriations were increased by €9 million for the Frontex agency, €9 million for the European Refugee Fund and €2 million for the Daphne programme.
Sub-heading 3b (Citizenship). Commitments were set at €697 million and payments at €649 million. The Youth in Action programme will receive €5 million more than the Commission's initial proposal.
Heading 4 (The EU as a global partner). Commitments were set at €9.4 billion, using the flexibility instrument for €150 million, and payments at €7 billion. The following amendments were brought to the draft budget: +€14.5 million for Asia, +€11.7 million for Latin America, and +€7.8 million for the Instrument for Stability.
Heading 5 (Administration). Commitments and payments were set at €8.3 billion, leaving a margin of €474 million. This is an almost 1% increase on the 2011 budget, so it effectively becomes a reduction when expected inflation is brought into the equation. The position of the European Parliament was approved for all institutions in commitments, as was amending letter No 2 for 2012 which provides for €13.1 million for the accession of Croatia.
Amending budget No 6/2011. The Council and the European Parliament also agreed on an updated draft amending budget No 6/2011 which was amended to the benefit of EU countries. This sees an increase in the 2011 budget of €3.25 million in commitment appropriations and €200 million in payment appropriations (the previous version provided for a €550 million increase in payments). The amending budget also increases revenues by €1.28 billion, decreasing as a net effect member states' contributions by €1.077 billion for 2011. A sum of €38 million in payments will be redeployed from rural development programmes to finance the mobilisation of the European Solidarity Fund following the earthquake in Spain (€21.1 million) and flooding in Italy (€16.9 million).
EP vote on 1 December. According to the procedure, the Council and EP have 14 days to formally approve the agreement. The Council is expected to give its approval on 30 November and in the Parliament on 1 December. (LC/transl.rt)