Brussels, 24/07/2012 (Agence Europe) - Felt to be over-generous by some (Germany, the Netherlands, the United Kingdom, Sweden, Denmark, Finland and the Czech Republic) and too stingy in terms of cohesion policy by others (Spain, Portugal, Poland, Greece, Croatia, Hungary and Latvia), the European Commission's revised draft Multiannual Financial Framework (MFF) for 2014-2020 was criticised from all sides at the General Affairs Council on Tuesday 24 July 2012. France particularly, along with Greece, says that ministers must discuss the question of EU own resources (alternative EU income) rather than focusing solely on expenditure.
During the debate on the MFF for 2014-2020, a debate which will continue at the meeting of European affairs ministers in Nicosia, Cyprus, on 30 August, 15 “cohesion-friendly” countries (Bulgaria, Croatia, Czech Republic, Estonia, Greece, Hungary, Lithuania, Latvia, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain) unveiled a joint statement pointing out that the European Summit had issued a strong message about cohesion policy and support for economic growth, investment and structural reforms (see EUROPE 10645) and it was therefore paradoxical to see that the revision of the draft MFF for 2014-2020 had resulted in less, rather than more, money for cohesion in the EU27. The 15 countries welcome the fact that the revised budget takes account of the fact that Croatia will shortly be joining the EU, which will clearly have a political impact. As the Commission's initial draft was based on a freezing of cash for cohesion, the 15 countries say that the absolute limit has been reached for reductions in cohesion policy cash.
EU Commissioner Maros Sefcovic said that the idea was to reach agreement in principle by the end of this year about the MFF for 2014-2020. He said the talks should not drag on unnecessarily as this would not send a good message to the inhabitants of Europe or the EU's partners around the world. He explained that under the new budget rules, the Commission has to start preparing the 2014 budget in January 2013. EU Budget Commissioner Janusz Lewandowski said the update was a technical, mechanical exercise to adjust the MFF to the fact that Croatia will be joining the EU and therefore the cohesion policy and payment caps needed revision. An amending budget will, however, be required to mobilise the extra cash required.
Poland read out the statement by the 15 cohesion-friendly countries. Hungary said it was in the worst position because its grant under the Cohesion Policy had been slashed by nearly 30% and this was politically unacceptable at a matter of principle.
Italy is not happy with the Commission's proposals and sympathises with the cohesion-friendly nations. The Italian representative says the proposal raises both political and financial questions.
Germany says the proposals do not hold water in some areas because they are based on over-optimistic economic forecasts. It called for cuts to be made in the draft MFF so that spending can focus on “smart growth”. Germany wants the EU budget to be less than 1% of EU gross national income and wants a proper solution to the problem of RAL (unspent commitments), and is keen on “better spending”.
The United Kingdom recommended a freeze in payments in real terms, describing this as a generous measure rather than demanding austerity, as at national level. The United Kingdom's representative warned that the country would not accept the current “technical adjustments” and recommended that new priorities be established to find the cash needed for the EU expansion Croatia without giving rise to new expenditure.
The Czech Republic criticised the cuts in cohesion policy spending but at the same time joined the “net contributors” in calling for a total budget of no more than 1% of EU27 GNI. Prague says spending cuts should be me made elsewhere in the budget and not in the cohesion policy.
Malta hoped the statement by the 15 cohesion-friendly countries would not be taken as a threat by the “better spending” countries. The prospect of a cut in structural funds would be catastrophic and could prevent the EU from emerging from crisis, the way Malta sees it.
Finland hoped the Cypriot Presidency would unveil figures for the MFF 2014-2020 in the autumn. The draft update takes a wrong turn, in Finland's view. It wants a budget of less than 1% of EU27 GNI.
Portugal says the technical adjustment has had a negative impact on cohesion by reducing the funding for less prosperous regions, including remote regions like Madeira. Portugal wants an “ambitious” MFF for 2014-2020 to demonstrate the EU is determined to implement the Growth and Jobs Pact decided upon by the European Summit.
Denmark called for 1% of EU27 GNI to be the upper limit for the EU's budget and for correction of Denmark's contribution to be an absolute priority. It said it would not accept anything less.
Austria wants the Commission's proposals to be cut by at least €100 billion.
Slovakia is unhappy with the update because it leads to a big cut in Cohesion Policy spending.
France wants realistic progress in the negotiating box for the 2014-2020 MFF for the common agricultural policy. It wants the EU to have other sources of funding (known as “own resources”) apart from cash the member states and does not want horse-trading in the budget between individual policies (pitting the CAP against cohesion policy, for example). Paris is also concerned about the individual sums to be unveiled for payment appropriations.
The Belgian lesson
Belgium gave a message to the net contributors, pointing out that in terms of Croatia's imminent arrival, the Commission has done good work and, on top of that, some adjustments should be discussed by experts rather than making a mountain out of a molehill about increases for various budget headings. Belgian European Affairs Minister Didier Reynders said people kept talking about cuts and reductions in the Commission's proposal, yet at the recent European Summit, there had been talk of €120 billion for growth. He said that if people starting cutting the EU budget for the next few years, then would have to work out exactly how much money this would mean is not available for growth, He said it was daft to think that the Commission's proposals can be slashed without a debate about making countries responsible for their finances, about inter-country solidarity, a more federal Europe and a growth plan. Didier Reynders recommended that the General Affairs Council consider how it can take a long view, look into these matters and best prepare for the European Summit rather than arguing about the ins and outs of niggling, technical reductions.
Bilaterals and continuation of discussions
The Cypriot Presidency provided a summary of the bilateral meetings on the 2014-2020 financial framework with each of the member states. European Minister Andreas Mavroyiannis noted that positions remain far apart. He was satisfied, nonetheless, with the willingness shown by countries to work towards an agreement by the end of the year. There is agreement that: - the new financial framework should contribute to growth and employment; - spending has to be better, instruments simplified and flexibility built in. The right balance has to be found between expenditure, on the one hand, and income, on the other, said Mavroyiannis, adding: “We are aware of the scale of the task that awaits us”. Some delegations are happy with the Commission proposals on the level of expenditure, others believe it not to be enough and still others want sharp cuts. The main areas of concern raised are: cohesion policy, the own resources system and the scale of the financial framework overall.
Mavroyiannis urged his colleagues to get down to real negotiation rather than simply setting out their own positions every time. There will be an “in-depth discussion” at the informal Council meeting in Nicosia on 30 August. To provide a structure to discussions, the Presidency will bring forward a reflection paper around 20 August. In the light of the bilateral meetings and the results of the informal meting, the Presidency will, “in early September”, present a revised version of the negotiating box on the 2014-2020 financial framework. The next General Affairs Council will take place on 24 September. (LC/transl.fl/rt)