On Tuesday 10 December, the European Affairs Ministers of the Member States displayed their profound differences on the elements of the next EU Multiannual Financial Framework (MFF) for 2021-2027 (see EUROPE 12384/10, 12383/1). Commissioner Maroš Šefčovič suggested to the new President of the European Council that an extraordinary summit on the next MFF be held in February.
Several delegations, such as those of Poland, Romania and Austria, even considered, at the General Affairs Council, that progress on an agreement on the next MFF had been undone.
Almost all ministers criticised the ‘negotiation box’ presented by the Finnish Presidency of the Council, especially the total amount proposed (1.07% of the Twenty-Seven’s gross national income) and the perceived disproportionate reduction in cohesion policy spending.
Several countries, such as France, Spain, Italy and Portugal, considered that the creation of new own resources would facilitate an agreement on the MFF, thereby making it possible to release new funding. But Poland, in particular, considered that there was no agreement on this point, neither on the emissions trading scheme nor on a national contribution calculated on the basis of the volume of non-recycled plastic packaging waste. The Netherlands indicated that it was “not in favour” of new own resources. The Finnish document refers to a majority position in the EU Council in favour of the ‘plastic tax’. France asked to go further by also retaining a resource based on the emissions trading system and a ‘carbon tax at borders’.
The 1% club. The Finnish ‘negotiation box’ foresees a total amount of 1.07% of GNI of the Twenty-Seven, compared to 1.114% in the Commission’s proposal.
The Austrian Minister defended a total budget of “1.00%” of GNI on behalf of four countries (Austria, Denmark, the Netherlands and Sweden). The figure of 1.07% is “unacceptable because “it would lead to an increase in our national contributions”, he added. According to him, the €50 billion reduction in the Finnish document (compared to the Commission’s proposal) “does not even represent half of the savings” needed. In addition, Austria has defended (as have the Netherlands, Denmark and Sweden) maintaining corrective budgetary mechanisms.
Germany noted that the Finnish proposal faced a wall of “objections” and deplored a ‘negotiation box’ that is a “vector of disproportionate reductions”.
Latvia regretted that the Finnish document did not correspond to the “spirit of Christmas”.
Cohesion. The 16 ‘cohesion-friendly’ countries, which signed the Prague Declaration in November, criticised the cuts in funding (in the Finnish negotiation box) in cohesion policy. “Ignoring the position of these many countries is indefensible and inexplicable”, the Hungarian minister said. She deplored the 27% decrease in funds under this policy, the lack of a uniform capping, the decrease in the safety net and the increase in co-financing rates at the national level. The cuts are neither balanced nor logical, the Czech Republic protested. For Lithuania, these reductions create a two-speed Europe. Poland criticised the planned “non-objective” method of allocating and capping funds.
Greece opposed the reduction of the maximum cap from 108% to 107%. Spain regretted a change in the balance in the Commission’s proposal, with the country having to bear 40% of the reductions. The reduction in relative prosperity co-financing for countries with less developed regions makes Italy “perplexed”. Germany, for its part, asked not to “leave out” its eastern regions (which would suffer from the planned cuts) and to find a solution to this problem. Spain, Portugal and Slovenia, in particular, criticised the planned new statistical reference period. France welcomed the retention of the categories of regions in transition.
Rule of Law. The so-called ‘net contributor’ countries (Austria, Germany, the Netherlands, Denmark, Sweden), as well as France, Belgium, Ireland and Portugal, welcomed the elements of the ‘negotiation box’ on budget protection in the event of a general failure of the rule of law in a Member State (conditionality). However, the mechanism as proposed is still contested by Hungary and Poland. France has asked to go further by creating social conditionality.
Agriculture. The Finnish Presidency has planned an increase (+€10 billion) in appropriations for rural development, which has been welcomed by several countries (France, Spain, Latvia, Ireland, Czech Republic). But France and Ireland have mainly called for an increase in direct aid under the first pillar (direct aid and market expenditure). Greece and Italy opposed external convergence of aid.
Discounts. France, Spain, Italy and Poland have requested the removal of discounts as early as 2021. But experts have no grand illusions. The final agreement should contain correction systems.
The inclusion in the MFF of the new ‘Just Transition Fund’ was welcomed by some delegations, as was the target of increasing to at least 25% the share of EU spending contributing to the achievement of climate objectives.
Greece and Malta criticised the cuts in funding for migration management.
Johannes Hahn, the European Commissioner for the Budget, criticised the “severe cuts” in several areas (defence, migration, Erasmus and others) and the decrease of €47 billion in total (2018 prices) compared to the initial proposal.
Upon her arrival at the EU Council, Amélie de Montchalin, French Secretary of State for European Affairs, said that there would be no agreement on the MFF at the European Council on Thursday. “But we need to set milestones and move forward to have an agreement before spring” 2020, she expressed hopefully. (Original version in French by Lionel Changeur)