Brussels, 18/11/2014 (Agence Europe) - The Council of the EU and the European Parliament have failed to reach agreement within the deadline (midnight on 17 November) set by the conciliation procedure on the various parts of the budget package, that is the amending budgets for 2014 and the 2015 budget.
Budget crisis is looming. The discussions among the three EU institutions foundered principally on the issue of unpaid invoices. As the procedure requires, the European Commission will have to bring forward a fresh preliminary draft budget for 2015. Differences over the 2014 amending budgets could be long-lasting, however (see EUROPE 11198). Parliament wants the Commission proposal (€4.7 billion) to be accepted so that some of the invoices can be paid. The Council, meanwhile, is unable to accept this amount.
In the course of conciliation's “last chance saloon”, on Monday 17 November, from 5.00pm till midnight, the Commission submitted a somewhat complex draft compromise which the member states found unacceptable. The Commission made changes and came back before the end of conciliation but the concessions were, once again, deemed insufficient by the Council.
2014 invoices. Draft amending budget no 3 to the 2014 general budget seeks to increase payment appropriations in the EU's 2014 budget by €4.7 billion to cover bills awaiting payment. The Commission proposed that €4 billion of this additional money be found by dipping into the contingency margin. The Council felt it had taken a major step towards MEPs in agreeing that €2 billion could come from this instrument and €361 million taken from the margin (between the budget and the ceiling set by the multi-annual financial framework) below the ceiling to pay the bills.
MEP Jean Arthuis (ALDE, France) who chairs the Parliament budgets committee, told the press on Tuesday 18 November that the Parliament had called for an envelope of €7 billion in all to stabilise the amount of unpaid bills (€4.7 billion under the amending budgets for 2014 and €2.3 billion for 2015). The Commission proposed a compromise of €5 billion but the Council could not accept it. “When it comes time to pay, we have to pay. Otherwise Europe will be forging money, and that isn't what it should be doing”, he said.
Special instruments. Parliament called for the special instruments (Emergency Aid Reserve, EU Solidarity Fund, Flexibility Instrument and European Globalisation Adjustment Fund) to be financed above the multi-annual financial framework (MFF) 2014-2020 ceiling, while the Council wanted funding of these instruments to remain within the ceiling. The Commission believed that there was a €711 million margin, taking the view like the Parliament that the special instruments should be funded from outside the MFF. The Council was looking at a margin of €361 million, removing the various flexibility instruments within the MFF (€350 million in total for 2014 under the proposed amending budgets).
The European Parliament is of the view that, from 2014 to 2020, these special instruments represent a total sum of €11 billion above the ceilings. The difference in the 2014-2020 MFF between commitments and payments is €50 billion. “The only way to reduce this difference is to use the special instruments”, argued Arthuis.
2015 budget. The Council believes it had, in comparison with its position in September, made concessions to the Parliament by increasing the total payment appropriations by €777 million (to €140.77 billion, an increase of 3.9% compared with the 2014 budget as it was adopted), in order to reduce (to €3.6 billion) the difference between commitments and payments. This difference is the cause of the problems currently being faced with regard to unpaid bills and the amount outstanding (RAL).
Risk of “provisional twelfths”. If the budget has not been adopted by the start of 2015, a sum equivalent to not more than one twelfth of the budget appropriations for 2014 or of the draft budget proposed by the Commission, whichever is smaller, may be spent each month for each chapter of the budget. Since the inception of the MFF in 1988, recourse to “provisional twelfths” has never been necessary. Since 2010, even years have seen budgetary conciliation failure whereas odd years have brought success.
What might be expected of the fresh Commission proposal? What does the Parliament expect of the new proposal on the draft 2015 budget from Budget Commissioner Kristalina Georgieva? The Commission should submit financial forecasts, that is “the schedule for disbursements”, advised Arthuis. More precisely, he called for a cashflow forecast. Gerard Deprez (ALDE, Belgium) Parliamentary rapporteur on the amending budgets for 2014, told EUROPE that he could “not see how the Commission, which revised financing needs resulting from invoices upwards, can bring forward a proposal that differs from what is on the table”.
Deprez regretted the Council's mistaken approach that, “if it meets our demands, it's a gift to the Parliament”. That is “stupid, because our concern is not to win a match but to treat the issue of payments seriously”, he said. He also regretted that the Council concerned itself much more with the proposal on countries' contributions to the budget, to resolve the British problem (see EUROPE 11195), than on the issue of payments. The Council has asked the Parliament to vote on this proposal as a matter of urgency. The Parliament intends to make use of this weapon to obtain the necessary payments.
For Arthuis, the way the budgetary negotiations have played out (long wait for the Council position, last minute compromise) “has revealed a malfunction of the European institutions”. If Europe has a debt of €30 billion, every country should provide a percentage of that debt from its own purse, Arthuis believes. He suggests that rating agencies should even add that percentage of the EU debt that they still owe to the member states' public debt. (LC)