Despite two days of intense negotiations, the 27 EU heads of state and government failed on Friday 21 February in Brussels to find common ground on the main elements of the EU’s Multiannual Financial Framework (MFF) for 2021-2027.
The President of the European Council, Charles Michel, did not wish to give any details on the next steps or the agenda for examining this dossier. “We need to conduct informal consultations in the coming days and weeks to find the best working process. Everything is on the table, we have the figures and numbers, technically we are ready. Now, there’s a political choice to be made. Is it possible for twenty-seven countries to converge on a political framework?” he said.
“The issue is obviously political. There are different opinions around the table on how the future European budget should be drawn up. There is a convergence of views on the need to pursue convergence efforts through cohesion policy and agriculture and on the need to modernise” the budget by financing the fight against climate change, digital development, and management of the migration phenomenon, explained the President of the European Council.
But to succeed in putting down figures, with impacts for the European project and for national contributions, “that is more difficult”, admitted Mr Michel. Especially since unanimity is required on this issue.
Negotiations were made more difficult by the 75 billion euro budget gap left by Brexit, he said.
“We must succeed, so we will have to keep going. To succeed, you have to try”, the former Belgian prime minister said. He expressed confidence: “By continuing a respectful dialogue, it should be possible to reach an agreement”.
Time is running out, according to the Commission. The President of the European Commission indicated that further work is needed. “It takes time, but it’s worth working hard to move forward”, commented Ursula von der Leyen. She insisted that “time is running out - all the steps must be taken by the end of 2020. Otherwise, in 2021, we will have no budget, so no Erasmus, no money for research, and no money for border protection”.
“We need a Europe that is capable of action and has a budget”, she summarised.
The debates indicated fierce opposition between, on the one hand, the four so-called ‘frugal’ countries - the Netherlands, Denmark, Sweden, and Austria - who want to limit the MFF to 1% of EU Gross National Income (GNI) and to benefit from lasting rebates and, on the other hand, a majority of Member States, who want to keep cuts in agricultural and cohesion funds to a minimum.
The French president doesn’t like blocking coalitions. “I don’t think it’s a good idea to try to separate into groups and then block things by getting together, by forming, as it were, blocking coalitions”, he said.
Nevertheless, as all these countries are “friends and partners”, he hoped that the dialogue will be re-engaged. “We must not stigmatise anyone at this time and we must re-engage with everyone”, he said, assuring that the Franco-German pair is working “to try to overcome divisions”.
France has defended its priorities, such as the common agricultural policy. “We have made some initial improvements in this area, but they are not conclusive, given that we have not reached agreement. And they are, in our view, still insufficient, so dialogue and work must continue”, said Mr Macron.
France has also defended the poorest regions, the outermost regions, which, according to its President, cannot be used as balancing items. The country also advocates greater ambition in the defence, space, and digital areas.
“The differences were too big and it didn’t come together. We must therefore continue to work”, admitted German Chancellor Angela Merkel.
As expected, the mechanism for protecting the EU budget from breaches of the Rule of law remains controversial. “I've heard enough about red lines today! I think the Commission’s proposal was, in my opinion, better than the one presented”, by Mr Michel, Ms Merkel said.
Leo Varadkar, the Irish Prime Minister, said his country is prepared to contribute more to the budget over the next seven years, “but not if it means reducing payments to Irish farmers and important programmes such as regional development, social development, and Interreg”.
An ambitious counter-proposal. Italy will be mandated, together with Romania and Portugal, with drawing up a counter-proposal from the countries calling for additional budgetary resources, in line with the ambitious vision of Europe shared by some fifteen countries.
“Let me be clear, we must match deeds with words”, said Italian Prime Minister Giuseppe Conte. According to him, the vast majority of countries see themselves in a more ambitious Europe. “Some call them the cohesion countries; I prefer to call them the ambitious countries”, he said, adding that there is still a lot of work to be done on the creation of own resources.
Budgetary rebates are no longer justified, said Spanish Prime Minister Pedro Sánchez.
His Portuguese counterpart, António Costa, criticised the way in which the negotiations were conducted. According to him, an attempt was made to “satisfy the position of a minority” made up of the four ‘frugal’ Member States, “although consensus is built on majority rather than minority positions”.
The ‘frugal’ countries defend their position. Mark Rutte, the Dutch Prime Minister, considered a budget set at 1% of GNI to be “the fastest way to reach our goal”, which is “not to pay more than we pay today”. According to him, Mr Michel’s proposal is no longer under consideration.
There is simply too much difference between net payers and net receivers in the EU, said Danish Prime Minister Mette Frederiksen. The collaboration between the four countries has been very strong, said Swedish Prime Minister Stefan Löfven.
“It’s not that unusual: in the past it has always taken two or three sessions to get results”, said Austrian Chancellor Sebastian Kurz. He welcomed the movement in the right direction that has taken place. “We will continue to coordinate among ourselves, the ‘Frugal Four’, and we will try to ensure that there is a breakthrough at the next summit”, he concluded.
Commission working paper rejected. At around 19:00 on Friday, at the request of Charles Michel’s team, the European Commission presented EU leaders with a working document containing some changes to the negotiating box presented by President Michel last weekend (see EUROPE 12426/1).
But European leaders rejected these adjustments, for a variety of reasons. “The proposal did not receive the support of either side”, confirmed Croatian Prime Minister Andrej Plenković, whose country holds the six-month Presidency of the EU Council.
The working document specifically included a cut of 24 billion euros - 10 billion euros in commitment appropriations and 14 billion euros in payment appropriations (with an equal reduction of national contributions). The new overall level would thus be 1.069% of EU GNI in commitments and 1.049% of GNI in payments.
As regards cohesion, a transfer from the margin under the MFF heading for cohesion policy of 4.8 billion euros was foreseen (for responding to political priorities and specific situations).
As far as the CAP is concerned, funding was proposed, but this would mean a 50 billion euro reduction in agricultural expenditures, compared to the current 2014-2020 MFF.
With regard to rebates, the Commission proposed 100% of the nominal value of the flat-rate rebates in 2020 for Austria (an additional 100 million euros for Vienna), Germany, Denmark, the Netherlands, and Sweden.
Regarding the Commission’s proposal, Ms Merkel felt that it had not been presented in detail, “because it was already clear that the framework conditions would not be sufficient to iron out the differences”.
See the working document submitted by the Commission amending the negotiating box: http://bit.ly/38JQ7i6 (Original version in French by Lionel Changeur with the editorial staff)