Excessive dramatisation. After a considered assessment of the different aspects, this column is not going to come into line with the excessive moaning and negative feelings which followed last Friday's European Council. The divergences of the member states on the 2014-2020 financial framework were well-known and the postponement of decisions featured among the possibilities that were set out the previous day. Several delegations had come to Brussels specifically announcing a certain number of aspects on which they were not prepared to make concessions - anticipating from the outset that they might use their right of veto rather than give way. The time for an overall compromise was not ripe. With the impossibility of concluding an immediate agreement having quickly been noted on Thursday evening, the need to continue the negotiations a few weeks later was inevitable.
Yet we received our fair share of dramatisation. For a large part of the press, it was a competition to find the most spectacularly negative formula - “The expected wreck”, “Europe, further failure”, “Conflicts between political leaders block relaunch of Europe”, and so on. The same information sources which dramatised the postponement would have been the first to criticise the possible concessions and to describe them as ruinous for national interests, announcing demonstrations and strikes. Right up until the last minute, several professional circles from one or other of the member states called for their heads of government not to give in on such and such a point, asking them to use their supreme weapon of the veto instead. In fact, the negotiation keeps going. Yet the divergences persist and no overall agreement can be formed. The situation deserves an attempt at clarification.
The financial challenge is not the crucial issue. From the purely financial point of view, the differences are not as huge as described. The budget allocation under discussion corresponds to about 0.01% of the EU's GDP. Of course, in the current circumstances, each country has to monitor spending closely. Yet the divergences on the overall allocation focus on a hundred billion euro to be distributed between all member states, and for a period of seven years. This dimension should be compared, for example, to the temporary bailout cost of just Greece. My first conclusion is that the overall allocation does not in itself represent the crucial issue.
The crucial issue lies in the way that this allocation will be used. Three elements are at stake:
(1) The common policies of the future - led by the cohesion policy and the common agricultural policy - their development and the distribution of their support between the member states;
(2) The revision of the rules that are confused and complicated and that govern the participation of the different member states in a vast share of the common expenditure, taking into account the adjustments which have come into play over the course of the years - sometimes with bizarre modalities;
(3) The modalities of the British contribution to European spending, as long as the United Kingdom participates as it pleases in the common policies. I will return to this aspect later.
The challenge essentially lies in the way the overall allocation will be managed and used. The future common policies depend on it. The correction of certain budgetary anomalies and the excess of rules applicable to one or other member state or group of member states - rules that have been introduced over the course of the years in a sometimes improvised way - is crucial.
The European Parliament is playing its role. The contribution of the European Parliament - which asserts its role and its word - is generally positive and balanced, even if the positions of the political groups are of course different. The president of the Parliament, Martin Schulz, insists on the need to make public opinion understand that the money being talked about is not destined for “Brussels” but for all the citizens of the EU.
Around 90% of the European budget is given directly back to the member states, which are then responsible for redistributing it to the final beneficiaries (farmers and others). If European credit was done away with, it would not be replaced by national initiatives - it would just be lost for the final recipients, Mr Schulz points out. In any case, the use of European funding depends on national or local authorities. And he has also observed that, very often, the recipient member state uses the funding for purchases in other member states - it is therefore to the benefit of all. The distinction between net contributors and net recipients is therefore largely artificial.
It is true that, following the interruption of the European Council's deliberations, some reactions within the Parliament have not been free from a certain amount of demagoguery. In the view of Joseph Daul, the leader of the biggest parliamentary group (EPP), last Friday's failure is “shameful (…) Mythomaniacs and eurosceptics dominated the negotiations”.
Nevertheless, other reactions are constructive. Guy Verhofstadt destroyed the position that wants to reduce the amount of the future European financial framework as much as possible - with the aim of thus keeping more resources at the national level. He observed that in reality (1) the EU budget only represents a minimal fraction of the national budgets; (2) in the absence of this budget, member states would have to finance directly the expenditure currently covered by the EU - for example, under the common agricultural policy - with complications and endless wastage.
Mr Verhofstadt recalled that the sum of the member states' national budgets is more than €6.3 trillion per year and that the European budget not only therefore represents a derisory percentage of this, but that its volume increases much more slowly. The crucial issue in his view is not to fight each other for a few billion euro more or a few billion euro less, but to support the policies of the future and to facilitate the flexibility of the European budget. For example, moving credits that are not used in one sector to other uses - which would be undefined at the start - instead of giving them to the member states; or creating substantial own EU resources.
Mr Verhofstadt is less convincing when he compares the scope of the European budget (around 1% of global wealth) to that of the American budget (which corresponds to around 24% of the national product). Such a comparison would be meaningful if the powers of the European institutions were similar to those of the president of the United States. In reality though, the EU states maintain their national autonomy. The two situations will be comparable when the respective powers are too. For the moment, even Greece demands it national autonomy despite it being totally dependent on Community funding.
Don't ignore the progress. The postponement until next year of the deliberations for the future budgetary framework makes defence of my argument even more difficult - my argument being that European construction is progressing, despite what it may seem. EUROPE regularly reports on the positive results, while reviewing the obstacles and failures as well. The overall assessment is favourable in my opinion - both in disciplining the world of finance (the effects are slow but real, in spite of the obstacles and reluctance), and in other sectors (the gradual revision of the fisheries policy is just one example).
The obstacles and slow progress in the financial framework and elsewhere must not lead us to forget the three fundamental political developments that we await: (1) the European elections of 2014; (2) the revision of the Treaty (or even a new treaty) which could result from this; (3) the position of the United Kingdom (or whatever it would be called, if Scotland chooses autonomy) within the EU or on the sidelines.
The British case. The British case is the most spectacular. The United Kingdom is part of the EU in its own way - choosing the areas in which it participates. It refuses on principle to join the eurozone; it does not participate in the intervention funds; it does not intend to join the Schengen area (passport control at its borders persists); it refused to participate in the Treaty on budgetary discipline (which it calls the fiscal compact): it will not participate in the planned banking union; it remains on the sidelines of the current or future disciplines regarding judicial cooperation; and it does not adhere to the revisions of the Treaty that Mr Van Rompuy and Mr Barroso are preparing in order to strengthen European governance. And as far as its participation in EU spending goes, Cameron especially rejects the idea of renouncing the British rebate.
In fact, what interests London is free trade. An agreement on this would suffice for it. This is a possible formula, but one which ought to involve it leaving the Community institutions.
Provisional conclusion. An overall compromise at the start of next year is far from being in the bag. If it fails, the EU would have to take the direction of a different future from the one we can already catch a glimpse of - but it would not be the end of European construction. This column will return to this.
(FR/transl.fl)