Negotiations between EU institutions to finalise the details of the Multiannual Financial Framework (MFF) 2021-2027 and the post-Covid-19 European Economic Recovery Plan resume on Monday 28 September (see EUROPE 12565/10).
Progress has been made at previous meetings on own resources for the EU budget, while everything is still open on the increases in appropriations for the EU flagship programmes and the mechanism protecting the budget against deficiencies in the Rule of law.
The aim is to reach full agreement by mid-October to allow time for ratification by national parliaments of the Own Resources Decision (which unblocks the funds of the Recovery Plan) and the adoption of no less than 60 sectoral texts on MFF-related programmes.
On own resources, an agreement between the Council of the EU and the European Parliament is said to be within reach on the incorporation, in an interinstitutional agreement on budgetary matters, of a timetable for the introduction of new own resources. Inclusion in the Interinstitutional Agreement would give a legally binding scope to this timetable.
However, the EU Council is moving more slowly than the European Parliament on the draft still to be finalised.
For example, the Parliament calls for a uniform rate of call on 1 January 2021 for the amount representing the revenue generated by the auctioning of allowances (ETS), whereas the EU Council would, at this stage, expect to see it at the beginning of 2023. For the European Parliament, the financial transaction tax should be in force from 1 January 2024, while the Member States want it for the beginning of 2026. The European Parliament and EU Council have therefore yet to agree on the pace of introduction of this basket of new own resources that will help finance the repayment of the €750 billion Recovery Plan.
No agreement in the EU Council. The proposal for a decision on own resources was discussed on Friday 24 September at the level of Member States' ambassadors to the EU (Coreper). There is still no agreement within the Council of the EU on this text, which requires unanimity, even though the European Parliament has already given its opinion.
One EU diplomat noted that around “one third” of the delegations have made it clear that they will not be able to support the decision as long as there is “no clarity” about the overall budget of the MFF. “This shows how important it is to make rapid progress in the negotiations with the European Parliament on the Multiannual Financial Framework in order to get the overall package across the finishing line in time”, he added.
EU flagship programmes. The EU Council does not want to provide new amounts for certain EU programmes (Horizon Europe, Erasmus+, EU4Health...), contrary to the European Parliament’s demands. At a previous meeting, the European Commission had reportedly presented a list of possible options, but neither the EU Council nor the European Parliament seemed able to accept them. The EU Council does not want to move on figures, while the European Parliament does not want new flexibility instruments or redeployment of appropriations.
MEPs are asking for fresh money and one possible compromise would be to take some programmes out of the MFF ceilings (placing money that was in the MFF outside the MFF), in order to free up room for manoeuvre for the EU’s flagship programmes. But nothing has been decided, at this stage, on this idea.
Rule of law. Next week, the German Presidency will present a proposal on a mechanism to protect the EU budget against shortcomings in the Rule of law.
This proposal will remain in line with the agreement of the European Council of 21 July, which states: “A conditionality regime to protect the budget and the Recovery Plan will be introduced. The Commission will propose measures in the event of non-compliance, which will be adopted by the EU Council acting by qualified majority”.
The European Parliament is in favour of reverse qualified majority voting to reduce the possibility of blocking at Member State level. But there will be no reverse qualified majority, confirmed two sources interviewed by EUROPE.
The scope of this ‘Rule of law’ mechanism is also a source of tension. Poland and Hungary want a system to tackle only fraud against the EU budget, while other countries and the European Parliament advocate a text covering, among other things, the Rule of law and the EU’s fundamental values.
Germany is concerned about the slow pace of negotiations. On Thursday, the German Ambassador to the EU, Michael Clauß, said he was “very concerned that the negotiations are currently progressing too slowly”. “We need to increase the pace of the negotiations significantly. We have offered the European Parliament to negotiate through the weekends as well”, he said.
Without a swift general agreement between the EU Council and the European Parliament on the MFF, “we run the risk of delaying the Recovery Plan”, he warned.
The German ambassador acknowledged that the intensive negotiations on the Rule of law mechanism are “extremely complicated”. However, the German Presidency will “soon” present a proposal “for adoption by the Council”.
The proposal “will closely follow the decision of the European Council”, but the ‘Rule of law’ mechanism “cannot be an Article 7 procedure by other means”, Mr Clauß said. And to recall that the aim is to protect the EU budget and, for the first time, to “to penalise breaches of the Rule of law in the use of (EU) budget funds”.
On the question of new own resources, the German diplomat points out that the EU Council has undertaken to respect the decisions of the European Council and that it “awaits the corresponding proposals from the European Commission”. At the same time, “we agree that we cannot restrict the budgetary and fiscal sovereignty of national parliaments”, he concluded. (Original version in French by Lionel Changeur)