EU leaders confirmed on Friday 18 October in Brussels the differences between them on the main elements of the EU's multiannual financial framework (MFF) for 2021-2027. They are meeting to discuss it again in December 2019 and the Finnish Presidency of the Council will have to draw up a new ‘negotiation box’ with figures (total volume and breakdown according to the various headings) for this purpose. This evolving document aims to help the European Council to find a compromise on the next MFF.
EU Heads of State or Government held a two-and-a-half hour “exchange of views” on the 2021-2027 MFF (see EUROPE 12350/4, 12349/6). They had already discussed it briefly in June (see EUROPE 12278/5).
At this point, delegations recalled their well-known red lines, but there will come a time when everyone will have to make concessions, as unanimity is required to approve the ‘negotiation box’ on the 2021-2027 MFF. António Costa, the Portuguese Prime Minister, referred to the “deep differences that remain”.
Taking their time? Charles Michel will be the next President of the European Council, as of 1 December. On Thursday 17 October, he acknowledged that “everyone understands that, when it comes to money, there is always a difficult and complex debate, but it is necessary to take the time”.
“Quality takes precedence over speed”, said Dutch Prime Minister Mark Rutte. It would be detrimental to quickly conclude a bad agreement, Portugal said, warning of the negative consequences of a delay in starting programmes.
Emmanuel Macron, the French President, said he had asked Charles Michel to “continue the discussions so as not to waste time”.
“We are under time pressure”, added Angela Merkel, the German Chancellor. She concedes, “We are still far from reaching an agreement. We must conclude it during the Croatian Presidency [first half of 2020], otherwise we will not have the chance to prepare all the financial programmes”, she warned.
More work to be done. “There was very little new information during the debate. I reminded EU leaders of their obligation to conclude this debate quickly. If we wait until the end of next year, we risk losing 2 years during which researchers will not be able to conduct research and young people will not be able to participate in the Erasmus programme”, said Jean-Claude Juncker, in response to a question from the press. And Mr Juncker mischievously stated that the European Council still had work to do to reach an agreement “on the budget proposed by the Commission”. He defended this proposal as “wise, combining traditional and new policies”.
Antti Rinne, the Finnish Prime Minister, noted that there was around the table one third of the countries seeking a compromise and two thirds who were standing by their positions. He intends to hold bilateral meetings with his EU counterparts to assist the Finnish Presidency in drafting this negotiation box.
The 1% club. EU leaders discussed various topics, such as the total volume of the MFF, the balance between policies, own resources and conditionality. Not all countries necessarily referred to the Finnish document which provides for a total MFF of between 1.03 and 1.08% of the Twenty-Seven’s Gross National Income (GNI), compared to 1.114% in the Commission's proposal. The Finnish document provides for one third of the total budget to be allocated to agriculture and the same amount to cohesion policy and the new policies.
Some so-called ‘net contributors’ to the EU budget, Denmark, Sweden, the Netherlands and Austria, have presented a similar position, aiming to cap the next MFF at 1% of the Twenty-Seven’s Gross National Income (GNI). Germany also argued for a MFF of 1% of GNI. Mark Rutte stressed the need to modernise the budget and reform cohesion and the CAP.
Do not oppose policies. French President Emmanuel Macron defended an “ambitious” budget and a “coherent” ambition, consisting in not pitting new policies (migration, space, defence) “where we need to invest” against traditional policies such as the common agricultural policy (CAP) or cohesion policy.
Cohesion. Some cohesion countries (including Poland, Slovakia, Hungary, Greece) have criticised the cuts in funding provided for in cohesion policy, both in the Finnish document and in the Commission's proposal. Pedro Sánchez, the President of the Spanish Government, told the press that the cohesion budget must be “maintained”.
The Finnish Presidency document would be more “equitable” than the reductions planned by the Commission. Finland’s approach would be to save money in the funds allocated to the transition regions and reallocate them to the less developed regions. “That's what Member States are asking for”, says a diplomatic source.
Agriculture. The majority of EU countries prefer to increase funds under the second pillar of the CAP. The Finnish Presidency has therefore planned a slight increase in appropriations for rural development and a freeze on first pillar expenditure in nominal terms (direct aid and market expenditure).
Several countries (including France, Spain, Ireland, Greece) have once again requested that the current CAP budget of 27 Member States be maintained from 2021 to 2027.
Rule of law. Hungary and Poland, in particular, do not want a mechanism to protect the EU budget against deficiencies in the rule of law.
But many countries, such as France, Germany, the Netherlands and the Scandinavian countries, insist that this instrument be included in the final agreement on the next MFF. Compromises will probably have to be made on the criteria for triggering the mechanism, one expert explains (see EUROPE 12335/1).
Own resources. The Finnish document only mentions a new, own resource based on the quantity of non-recycled plastic packaging waste. France cited, inter alia, the carbon tax at borders, the tax on non-recyclable plastic and the digital tax.
Discounts. On discounts and corrections, Finland's document assumes that with the departure of the United Kingdom and, therefore, of the British cheque, all corrective mechanisms must disappear. This is a major demand of France and Italy, in particular. Emmanuel Macron defended “the end of discounts”. “The discount was British, we must put an end to this element that destroys the European budget”, he said.
But experts have no grand illusions. The final agreement should contain systems of corrections, which the countries concerned will not give up, says one source. Some of the so-called net contributor countries, such as the Netherlands or Austria, have defended maintaining the corrections.
An agreement has already been formalised on the euro area budget, which is expected to reach around €22 billion, according to the Commission. Denmark and Sweden (which are not in the euro area) have already negotiated their corrections for this budget, as they will not finance it (see EUROPE 12346/2). These corrections will have to be included in the overall agreement on the next MFF.
It will also be necessary to include in the MFF the new ‘Just Transition Fund’, probably financed through redeployments of appropriations. (Original version in French by Lionel Changeur, with editorial staff)