In Brussels on Monday 14 May, several member states protested against the plans on the table to reduce the budgets for agriculture and the cohesion policy over the period 2021-2027.
The 'General Affairs’ Council, the lead Council on the multiannual financial framework (MFF), stands divided over the total level of spending and reform details of the system of own resources of the EU. Furthermore, Poland, Hungary and the Czech Republic criticised the proposal setting in place a link between the payment of European funds and compliance with the rule of law.
In early May, the Commission proposed setting the forthcoming MFF at 1.114% of the gross national income (GNI) of the EU of 27 (€1.135 trillion in commitments at 2018 prices and €1.105 trillion in payments), as against a level of 1.03% of GNI for the period 2014-2020 (see EUROPE 12013).
The ‘cohesion’ countries speak out. Poland, Estonia, Portugal, Slovenia, Greece, Slovakia, Romania, Malta, Ireland, Croatia, the Czech Republic and Hungary opposed the 7% cut in the cohesion budget proposed by the Commission.
The new priorities should not be paid for at the expense of the traditional policies (cohesion, CAP), the Polish minister started by saying. He argued that in real terms, the reductions represent 10% to 15% and certain countries may see their cohesion policy cut by 30%.
On the criteria for the payment of the cohesion policy credits, several countries (Poland, Spain, Portugal) argued in favour of keeping GDP per head of population is the principal criterion.
The Commission proposes to take account of other criteria. France, Italy and Malta, amongst others, called for new socio-economic criteria to be included and the Commission showed openness on the subject of setting up new criteria.
France defends the CAP. France and Spain, supported by other countries (Ireland, Poland, Malta, Croatia, Slovakia, Hungary, Romania, Estonia, Portugal and Italy) protested against the cuts to agriculture spending.
France “cannot accept the drastic cut that is tantamount to making the CAP bear a disproportionate share of the cost of the withdrawal of the United Kingdom”, said Nathalie Loiseau, the French Minister for European affairs. Reducing the CAP budget is of concern to us, stressed Ireland, whilst Spain said that it did not like the reduction. Lithuania, Finland and Portugal also criticised the reduction in the funding for rural development, the second ‘pillar’ of the CAP.
The Czech Republic furthermore oppose the proposal to cap direct agricultural aid.
Total volume. Whilst Portugal considers that the proposal lacks ambition over the total volume of credits, most so-called ‘net contributor’ countries to the EU budget - such as Denmark, Sweden, Finland, the Netherlands and Austria - opposed the increase in the national contributions called for by the Commission. We must stick to the current limit of 1% of gross national income (GNI) of the EU, these countries argue.
The MFF must be reformed in depth, said the Netherlands in particular, calling for more savings in the CAP and cohesion.
France, on the other hand, reiterated that it would accept an increase in its contribution to the EU budget, subject to certain conditions. Germany stressed the advantages of sticking to a limit of 1% of GNI.
Rule of law. The proposal to make the granting of European aid conditional on compliance with the rule of law gives the Commission too many powers, argues Poland, which called for a solution based on the treaties. The Czech Republic was also critical of the plan, stressing that it is at the level of the member state that the work must be done. The proposed decision-making procedure (inverse qualified majority) is not to Prague’s liking.
Hungary also considers that great care should be taken when acting in this area. We must “stick to the legislation to the letter, or the process could be discredited”, said Budapest, which expressed its reservations on the legal basis, proportionality and criteria (which it felt were too vague).
In the opposite corner, the Netherlands considers that conditionality should be increased. France also supports this ‘rule of law’ mechanism, as do Germany and Sweden.
Own resources. France would, for instance, have liked to include the tax currently still being discussed on taxing the digital giants among new sources of EU own resources (see EUROPE 11983), along with a tax on the carbon market or the common consolidated corporate tax base (CCCTB).
Paris also wants Brexit to be used to get rid of all rebates granted to certain member states on their national contribution from 2021, rather than gradually over five years as proposed by the Commission. Italy also called for the rebates to go.
However, the Netherlands described as unacceptable the gradual phasing-out of the rebates, as it considers that it has been “doubly affected by Brexit”. Malta opposed the EU budget being financed through direct taxation.
The European Commissioner for the Budget, Günther Oettinger, explained to the ministers that the Commission had decided to “split the difference”. It will have to plug a gap of between €12 and €14 billion due to Brexit, by making savings (reducing agriculture spending by 5% and cohesion spending by 7%) and increasing certain budgets (research, Erasmus+, defence, migration). “We are at the heart of all the discontent, and so this proposal is a point of balance”, said the Commissioner, acknowledging that his proposals were not entirely satisfactory to anybody.
It is worth noting that Italy asked the EU to make increased financial efforts for the external plank of immigration and on cooperation between the EU and third countries to tackle traffickers and illegal immigration.
Timetable. Ireland and Denmark consider that the timetable hoped for – an agreement before the elections of May 2019 – was ambitious. Sweden argued that a good result is preferable to a fast result. (Original version in French by Lionel Changeur)