EU Heads of State or Government began a marathon, on Thursday 20 February in Brussels, to try to find a compromise on the main elements of the EU's Multiannual Financial Framework (MFF) for the period 2021-2027 (see EUROPE 12429/1).
The differences between the Twenty-Seven EU countries seem so great that it was impossible to predict at the time of going to press whether an agreement could be reached on Friday 21 February on this potentially explosive issue.
EU leaders did not seem to want to conclude at all costs on the next MFF at this European Council meeting. Some EU leaders hinted on Thursday, upon their arrival at the European Council, that they hoped for "progress", suggesting the possibility of convening another summit to reach a unanimous agreement.
Nevertheless, several officials were determined to negotiate all the way to the end in order to come to an agreement in a single attempt.
Prior to a first round with the Twenty-Seven, the President of the European Council, Charles Michel, met the French President, Emmanuel Macron, and the German Chancellor, Angela Merkel. He then held bilateral meetings with some Heads of State or Government to prepare a possible new negotiating box.
EU leaders seemed to want to defend their priorities tooth and nail before making the necessary concessions to find a common ground. The most difficult issues in the negotiations are: - the total level of the post-2020 MFF; - the amounts to be allocated to the Common Agricultural Policy (CAP) and cohesion; - the structure of EU budget revenue (new own resources and phasing out of rebates for five countries).
Mr Macron ready to take the time needed. Emmanuel Macron, upon his arrival on Thursday, affirmed his willingness to take "all the time needed to find an ambitious agreement". "If everyone puts a little bit of spirit of compromise and ambition into it, there is a way to reach an agreement at this summit", he said. And he added: "This path may take a few hours, a few nights, a few days. I'm ready!"
Mr Macron, who is due to attend the opening of the Paris Agricultural Show on Saturday, explained that France will "fight to have a common agricultural policy that matches our ambitions". And on the CAP, "we are not there", he noted.
The French President also expressed his willingness to "fight also for a more ambitious European Defence Fund". Strongly defended by France, which sees it as a means of obtaining European funding for major joint military industrial projects, this Fund was initially intended to amount to €11.4 billion. But it was reduced to €7 billion in Charles Michel's draft compromise (see EUROPE 12426/1).
Asked about the position of the so-called 'Frugal Four' countries - Denmark, Sweden, the Netherlands and Austria - which advocate an MFF of 1% of EU Gross National Income (GNI), Mr Macron replied: "We must record the departure of the British. For all that, it would be unacceptable to have a Europe that compensates for the departure of the British by reducing its means".
Mrs Merkel refuses to make any prognosis. German Chancellor Angela Merkel explained that Germany was coming to the summit "with great determination to find a solution. There is no guarantee at this time that we will be able to do so". Hoping for at least "some progress", she expressed her dissatisfaction with the compromise on the table. "It is clear that on the German side we invest more money than we get back. But it has to be well balanced within the group of net contributors", she explained.
For the rest, Germany "has a great interest in continuing to receive aid for our new States". Merkel advocated a modern agenda and supported the importance of the EU's new political priorities such as migration, external border protection and development aid.
"So we are faced with a complicated task. On the one hand, there are legitimate expectations: those of the agricultural sector, for example. But on the other hand, we have to put the emphasis on modernity", the Chancellor summed up.
For his part, the President of the European Council considered that all the elements were on the table to decide. He acknowledged, however, that the last steps to be taken are often the most difficult.
"We want to be very ambitious", said Giuseppe Conte, President of the Italian Council. Advocating "a greener and more digital Europe", he said that "for all these challenges, we need adequate financial resources". "We don't like rebates", he also said.
Finland wants a robust budget/Rule of law mechanism. Finnish Prime Minister Sanna Marin considered Mr Michel's proposal, which sets the overall MFF at 1.074% of EU GNI, "too high".
The Finnish priorities are rural development (25% reduction in Mr Michel's draft plan) and climate actions.
Mrs Marin also expressed her disappointment at the 'Michel' plan, which has the effect of 'watering down' the conditionality mechanism between the payment of budget funds and respect for the Rule of law. She advocated for a stronger mechanism, while her Polish counterpart, Mateusz Morawiecki, said the text on the table was "moving in the right direction".
In contrast to the ‘Frugal Four’, Finland, like a large majority of countries, is against budget rebates and corrections.
Poland also opposes rebates and is taking a "very constructive" approach to revenue, for example on proposals to introduce an EU-wide digital tax or a CO2 footprint tax.
1% and rebates! For Danish Prime Minister Mette Frederiksen, it would be good if the agreement could be reached this weekend. "But I wouldn't bet on a deal this time around." Do you prefer a budget of 1% of GNI or to keep the rebate? "Both are important", she told the press.
Stefan Löfven, the Swedish Prime Minister, admitted that the countries' positions were still far apart. Mr Michel's compromise is far from sufficient in his view. He defended the position of the ‘Frugal Four’ in favour of an overall limit of 1% of GNI and "sustainable rebates". Stefan Löfven also called, as Finland did, for a "strong" Rule of law mechanism.
‘Friends of Cohesion’ are disheartened. Pedro Sanchez, the Spanish Prime Minister, said that Mr Michel's proposal was disappointing and that it would be worse, "not only for Spain, than the Finnish proposal".
On the same page was António Costa, the Prime Minister of Portugal, "[Michel's proposal] is bad for the Union, for cohesion and for Portugal", he said. "We have a new Commission, we have a new strategic programme and we therefore need the necessary means to develop the programmes and policies we have identified as priorities. Otherwise, we lose credibility with regard to what we have said to our citizens", the Portuguese leader said.
Kyriákos Mitsotákis, Prime Minister of Greece, regretted in particular that the Commission's initial proposal had been revised downwards with regard to funds for managing migration. "We need to provide more resources to the countries on the front line as well as to Frontex", he said.
"We don't like the Commission's emphasis on new policies and new technologies", said Andrej Babiš, the Czech Prime Minister.
Mr Morawiecki opposed cuts in funding for cohesion and the CAP, as did Lithuanian President Gitanas Nausėda.
The priorities of Jüri Ratas, Prime Minister of Estonia, are direct payments to farmers and Rail Baltica.
The President of the European Commission, Ursula von der Leyen, promised a "long and difficult" negotiation. According to her, 25% of the budget should be devoted to the European Green Deal. "I also welcome the inclusion of the Just Transition Fund in the budget", she added.
To consult the negotiating box presented on Friday 14 February by Charles Michel on the MFF 2021-2027: http://bit.ly/2UTeRk6 (Original version in French by Lionel Changeur with Mathieu Bion, Agathe Cherki, Damien Genicot and Camille-Cerise Gessant)