Brussels, 23/11/2012 (Agence Europe) - On Friday 23 November, EU27 heads of state were unable to reach agreement on the EU's Multiannual Financial Framework (MFF) for 2014-2020, and now hope to reach agreement on this tricky issue in January 2013.
“We discussed the Multiannual Financial Framework. We must work on a moderation budget. The times call for it. Every euro must be carefully spent,” said the president of the European Council, Herman Van Rompuy, pointing out the areas where the EU27 were in agreement, namely that there should be a budget for growth.
“There's no need to dramatise: these budget negotiations are so complex they generally take two goes,” said Van Rompuy, saying that there were disagreements between the different countries, but he was confident that an agreement would be reached “at the start of next year.”
The president of the European Commission, José Manuel Barroso, said that consensus had not yet been reached and a series of further discussions would be needed. He pointed out that this was the first time in the history of the EU that the discussions were about genuine reductions in the budget.
Why not make more cuts? Van Rompuy said his proposal included serious reductions, totalling €80 billion vis-à-vis the initial proposal. This gave an MFF for 2014-2020 that is 2% lower (€20 billion) than the current MFF (2007-2013). The budget has already been hugely slimmed down, he explained, but hinted that he might make other cuts later in the negotiations, such as in administrative expenditure; but he was working on a one step at a time basis.
On the revenue side of the budget (keeping the British rebate and the special rebates for Germany, the Netherlands and Sweden), Van Rompuy said he had presented a draft compromise for the next MFF, which had been discussed, but agreement had not been reached based on his proposal. He said, however, that there had been the political will to break a few taboos in order to reach agreement.
The summit statement document ends: “The European Council gives its President the mandate together with the President of the European Commission to continue the work and pursue consultations in the coming weeks to find a consensus among the 27 over the Union's Multiannual Financial Framework for the period 2014-2020. We should be able to bridge existing divergences of views. A European budget is important for the cohesion of the Union and for jobs and growth in all our countries.”
The EU is living in a parallel universe, says David Cameron
“The compromise on the table was not something I was prepared to accept and we were not the only ones,” commented the British prime minister, David Cameron, on the failure of the European budget negotiations. He slammed the rash rise in expenditure, European civil servants' lavish lifestyles and an EU that “seems to live in a parallel universe.” Cameron said that further cuts were needed, particularly in cohesion and farm aid, and also in the lifestyle of European civil servants. He said he wanted to protect the British rebate, without which the UK “would be the biggest contributor to the EU's budget.”
Angela Merkel: Things should not be forced through but finalised carefully
Upon arriving for the summit, the German chancellor, Angela Merkel, said another summit would be needed to reach agreement (she was echoed by the Netherlands and Sweden on this) and she preferred quality to haste, welcoming the agreement to reach agreement at the start of next year rather than who knows when. She said it wasn't speed that mattered, and things had to be weighed up, preparing carefully without forcing matters. She said a lot of work had already been done and the EU would now finalise matters carefully to reach agreement among all 27 member states rather than distinguishing between net contributors and the others. Merkel refused to describe the postponement of agreement as failure. Asked about her support for the British point of view, she said rebates had to be discussed and good sense must prevail. She said it was not true that the Danish prime minister had threatened to veto a deal if Denmark was not given a rebate. Merkel wants further reductions in the latest draft compromise, but refused to tell reporters how big a cut was possible in administrative expenditure.
François Hollande calls for a bigger CAP
Stressing the importance of the Common Agricultural Policy (CAP), the French president, François Hollande, said that although Herman Van Rompuy had agreed to increase the proportion of funding allocated to the CAP compared with the initial proposal, it did not go as far as Hollande wanted. Pointing out that new policies would need to be financed, he said the CAP must not be the variable where adjustments are made. He also defended the structural funds, saying it was possible to defend cohesion and the CAP without this leading to cuts elsewhere. Hollande said that if the area where cuts are made is not to be the CAP or the cohesion fund, then it would have to be the growth policy, administration and foreign policy. The French president said the rebates should be re-calculated so that all countries contribute to them.
Donald Tusk is happy that the Cohesion Fund and CAP will be spared
Despite the lack of agreement on the MFF at the end of the European Summit, the Polish prime minister, Donald Tusk, did not hide the fact that he was happy to have been given a guarantee that the cohesion fund and the CAP would not be touched in the next round negotiations, adding that these were the two most sensitive issues from his point of view, so it was genuinely better than he thought twelve hours ago; but final agreement is still a long way off.
Elio Di Rupo says British will have to be flexible
The Belgian prime minister, Elio Di Rupo, said he was optimistic because work had been done that had led to convergence and there would now be bilateral meetings before meeting up again at the start of next year - some say in January, others the end of March. The Belgian prime minister said that Belgium wanted to retain 25% of customs duty collected at its borders and it would pay great attention to direct payments when it comes to cuts in the CAP. Belgium wants to try and get more when it comes to the structural funds for convergence and competitiveness and the idea of transition regions, particularly for the Limbourg region. Di Rupo refused to say the British had caused the talks to fail, but did say that the British demand for a further €30 billion of cuts would make things more difficult and the British couldn't have both this extra cut of €30 billion and its rebate.
Samaras wants more cash for the Cohesion Fund
The Greek prime minister, Antonis Samaras, welcomed the understanding around the table about allocation of the cohesion fund. Greece's share has been decreased because there are more member states now demanding their share of the cake and because countries' allocations are calculated on their economic performance in 2007-2009, before the crisis and recession began to kick in with full force. The share initially earmarked for Greece, €11.2 billion, was quite “low” said Samaras, hoping it would be bigger by the end of the negotiations. He explained that Van Rompuy's compromise gave Greece 20% more than in the initial proposal, but talks were continuing.
The Italian prime minister, Mario Monti, said the reimbursement mechanism for some countries needed to be revised because it is distorted and unfair. Italy is relatively happy with the reduction in spending on the cohesion fund, but not the cut in farm expenditure, particularly direct aid for farmers.
The Spanish prime minister, Mariano Rajoy, said that Spain, France and Ireland had joined forces to defend the budget for the CAP, which was an extremely important policy both economically and socially.
Enda Kenny, the Irish prime minister, was highly optimistic about agreement being reached under his country's holding of the rotating presidency (it takes over from Cyprus on 1 January 2013). He said that it would “involve another part of work with European Parliament.” (LC/SP/AN/CG/MD/EL/SP/ K/FG/MB/EH/transl.fl).