Although it did not formally receive the unanimous support of the 27 heads of state or government, the fourth negotiating box for revising the 2021-2027 Multiannual Financial Framework (MFF), presented by the President of the European Council, Charles Michel, on the night of Thursday 14 to Friday 15 December, is supported by 26 Member States, as Hungary has not yet been convinced (see EUROPE 13314/2). The EU27 will meet at the end of January or beginning of February to try again to reach an agreement, with the options of moving forward at 26 no longer ruled out.
According to this negotiating framework, made public at the end of the first session of the European Council (https://aeur.eu/f/a5p ), the revision of the EU’s long-term budget would be financed by €21 billion in fresh money and €10.6 billion in redeployments from the existing MFF.
Speaking to the press, German Chancellor Olaf Scholz expressed his desire to see “more redeployment for all Member States”, stressing the importance of consolidating national budgets.
Migration. The package envisaged to help Member States manage the challenges and needs associated with migration amounts to €9.6 billion: €2 billion would be allocated to migration and border management, while €7.6 billion is still on the table for the external dimension of the EU’s migration policy.
At the end of the European summit, the Italian Prime Minister, Georgia Meloni, welcomed the “flexibility of the funds” in this area, an approach that is in line with her country’s priorities.
STEP platform. The ‘Strategic Technologies for Europe’ platform, with which the European Commission hopes to strengthen the EU’s “resilience” in the industrial and digital fields on the basis of a budget of €10 billion, has been reduced to €1.5 billion.
This is the portfolio that has been revised downwards the most in the current negotiations. Wrongly, according to Christian Ehler MEP (EPP, German), who saw it as a threat to “Europe’s future well-being and competitiveness”, in a press release issued by the European Parliament’s budget negotiators.
Support for Ukraine. With the exception of Hungary, all Member States remain firmly committed to providing Ukraine with financial assistance worth €50 billion over the period 2024-2027 (€33 billion in loans and €17 billion in grants). But Hungarian Prime Minister Viktor Orbán, alone against the rest, unanimously blocked any agreement.
“I have always said that if the EU budget were to be amended (...), Hungary would seize the opportunity to clearly claim what it deserves. Not half, not a quarter, but the whole”, said Mr Orbán on state radio on Friday morning. He openly praised the merits of his opposition, which aims to obtain in exchange the release of European funds that remain frozen due to Hungary’s insufficient reforms in the field of the Rule of law.
However, the European Commission has reaffirmed the rigour of European rules. “The same principle applies to everyone: investment goes hand in hand with reform”, declared its president, Ursula von der Leyen.
Towards an agreement at 26?
At the end of January or beginning of February, according to Mr Michel, the EU27 will attempt to reach a unanimous agreement on this issue. However, they no longer rule out other options, should Hungary maintain its veto.
“We are going to make the most of the time leading up to the next summit to reach an agreement among the 27 of us, and we will have worked on alternatives that we can make operational when the time comes”, said Mrs von der Leyen. She announced that the Commission would pay Ukraine the final tranche of macro-financial assistance of €1.5 billion before the end of the year, as part of the €18 billion in aid agreed by the EU for 2023.
This sum will be used to bridge the gap with macro-financial management assistance. “It is very important that we have coherent, predictable and reliable funding for Ukraine”, stressed Mrs von der Leyen.
For Mr Michel, “there are various tools available to ensure that we are able to fulfil our promises” to Kyiv.
Macro-financial assistance to Ukraine for 2023, allocated in the form of preferential loans, consists of an envelope based on a budget guarantee based on the 2021-2027 MFF. The European Court of Auditors has nevertheless pointed out “the considerable risks” for future EU budgets represented by the financial technique (use of the margin between commitment appropriation and payment appropriations in the EU budget) used to guarantee the loans granted to Kyiv (see EUROPE 13069/2).
The European Council could still decide to extend this instrument for another year, with the twenty-six Member States taking over Hungary’s share of the guarantee. Other solutions exist, such as bilateral loans.
In a joint statement, the co-rapporteurs on the MFF, Jan Olbrycht (EPP, Polish) and Margarida Marques (S&D, Portuguese), “deeply regretted the inability of the European Council to reach a common position” on the revision of the MFF. “This means a worrying period of uncertainty and leaves the EU unable to address the shortcomings of the EU budget, to fund the political priorities we have all agreed on”, they said in a statement.
To see the conclusions of the European Council: https://aeur.eu/f/a60 (Original version in French by Bernard Denuit with the editorial staff)