Brussels, 22/11/2012 (Agence Europe) - On Thursday 22 November, the heads of state and government of the EU began their marathon meeting to try to bash out a compromise on the highly sensitive file of the EU's multiannual financial framework (MFF) 2014-2020. “With Germany, we are - as always - going to be the engines for finding this compromise”, said French President François Hollande on arrival at the summit on Thursday 22 November.
Having met for the whole day with each of the EU leaders, Herman Van Rompuy, the president of the European Council, was due to submit a new draft conclusions document on the MFF 2014-2020 at the beginning of the evening. He was not due to have proposed additional cuts to those already on the table (€75 billion compared to the initial Commission proposal, plus €6 billion in instruments outside the budget) but to allocate differently between the headings the sacrifices demanded. The idea would be to rebalance the cuts operated in the cohesion policy, to reduce those planned until now for agriculture, and to review downwards in heading 4 (external action) and 5 (administrative expenditure) and perhaps in 1a (competitiveness).
Franco-German understanding? Contacts between the European leaders intensified on Thursday before the official opening of the extraordinary European Council. The president of France, François Hollande, met the German chancellor, Angela Merkel, around 5.15pm. Although France above all does not want farm spending to be reduced and considers Van Rompuy's proposal on this unacceptable, Germany is waiting to have a more complete vision of the package before taking a stance on how much is to be earmarked for CAP. Berlin calls for a balanced reduction of all EU budget headings. Germany does not want any reductions that are too extreme, we are told. France and Germany have quite a similar stance on the “receipts” chapter of the budget. Paris targets the British rebate directly, while Berlin is for now limited to asking for a transparent system for all. However, for as long as the British rebate exists, the special cheque rebate enjoyed by Germany must also persist, sources say.
France defends a budget that is sufficiently consistent for controlled growth policies, Hollande has said, adding that Europe must have a budget that is controlled, and every euro must count. However, it must correspond to the interests of Europeans, namely in that it must give preference to growth, and solidarity including through the cohesion policy. Hollande concluded by saying he came to seek a compromise not to pose an ultimatum.
Upon her arrival at the European Council, Angela Merkel said there would perhaps be a need for a “second stage”, in other words another European Council in early 2013 in order to finalise a compromise on the financial framework. On the subject of the cuts, she said one should not raise the bar too high.
British veto on rebate? The “British cheque” was €3.6 billion in 2011 and was mainly financed by France (€965 million), Italy (€717 million) and Spain (€487 million). When he arrived in Brussels, British Prime Minister David Cameron said he would be “negotiating very hard to get a good deal for the British taxpayers and to keep the British rebate”. Van Rompuy's proposals maintain the rebate but suggest that the EU27 as a whole should contribute to rebates - a situation that would nonetheless have the effect of reducing by several billion the amount of the British cheque. Although Cameron has reiterated the ill that he thinks of Van Rompuy's proposal, the British are said to consider the proposal is along the right lines. They could be satisfied with a capping at €940 billion payments over seven years, which would be a reduction of €3 billion compared to the current framework of payments. Tens of billions of euro in additional cuts could be made in the Connecting Europe Facility, the External Action Service and administrative spending, Cameron suggested during his exchange with the European Council president.
The dividing line between, on one side, the “Friends of Cohesion” (Poland, Spain, Greece, Portugal and Hungary) and, on the other, the net contributors, has not moved an inch. The British, Swedish and Dutch prime ministers confabulated during Thursday and their views are already closer when it comes to the need to make further cuts.
Sweden's Prime Minister Fredrik Reinfeldt reaffirmed that net contributor countries were likeminded when it comes to reducing total expenditure. He promised, moreover, to be constructive in this way of thinking in order to obtain a more “modern” budget that deals with “competitive problems” in Europe. Sweden, which is one of the five countries that could hold claim to a rebate, will be intransigent in this respect. Reinfeldt said he would hold “lengthy discussion” on the EU27 contribution to the rebates.
Dutch Prime Minister Mark Rutte also plans to play the card of “modern” and “sober” budget, his priority being to support innovation. He also insisted on a “fair deal that includes our rebate”. He does not rule out another summit in January, or a Dutch veto, preferring on this subject “not to take a loaded gun out of his pocket”.
Spain's Prime Minister Mariano Rajoy, who has much to lose in the budgetary battle, met François Hollande, the Italian prime minister, Mario Monti, and Angela Merkel.
Monti said before his meeting with Van Rompuy that he followed three objectives: equity, solidarity and efficiency. He judged that the proposal from the European Council at this stage penalised Italy. It is essential to have better results for CAP and cohesion, he said. Nonetheless, he recognised the need for budgetary austerity that is the same for Italy as for the rest of Europe.
Belgium supports an ambitious budget, according to Prime Minister Elio Di Rupo, saying that, if one reduces the European budget possibility, then it is European policies that will be reduced. He is counting on France and Italy to maintain their level of ambition, and to defend the transition regions in cohesion policy. Belgium will form a common front with the Netherlands for defending their right to withhold 25% of customs duties that they collect and pay back to the EU budget, against 15% as proposed by Herman Van Rompuy. (LC/MD/transl.jl)