Whether they are called the “frugal” countries, the “thrifty” countries, or the budget “modernisers” club, this group of northern European states is highly dissatisfied with the quantified negotiation box unveiled this Thursday, 11 June, by the Cyprus Presidency of the Council of the EU. On the one hand, this highly anticipated document—which proposes new balances within the post-2027 Multiannual Financial Framework (MFF) compared with the European Commission’s initial proposal—is confined to a reduction in the overall amount that is deemed far too limited. Countries such as the Netherlands, Sweden, Germany, Austria and Denmark were, however, arguing for a far more substantial cut in the European budget for 2028–2034. Furthermore, there is good reason for this since they are among its main “net contributors”. The Cypriot negotiation box suggests an overall reduction of around 2% in the MFF presented by the European Commission, which amounts to savings of around €38 billion over seven years (totalling €1.947 trillion), at current prices.
“I am surprised and disappointed. The ‘cuts’ are barely visible and wholly insufficient. Sweden has always been clear: the volume of the budget must be reduced, and reduced considerably”, thundered Swedish Minister for European Affairs Jessica Rosencrantz on Thursday, denouncing a negotiation box that was barely “in line with reality” and “could not serve as a basis for discussion” (“This one is a no-go box”).
The same message came from the Netherlands: “The overall volume remains far too high at a time when budgetary room for manoeuvre is limited everywhere in Europe and difficult choices are unavoidable”, pointed out Dutch Finance Minister Eelco Heinen. “This budget is unaffordable, unbalanced and badly targeted “, he summarised by way of further judgement.
This is because, beyond the overall size of the MFF, it was Nicosia’s trade-offs within the budget that particularly displeased these countries.
These states, sometimes described as “frugal” (although they prefer the term “modernisers”), do in fact want to reform the European budget in order to promote “new priorities”, foremost of which are defence, competitiveness and migration. However, it is precisely these spending items, included under Headings 2 and 3 of the architecture of the next MFF, that have been cut (see EUROPE 13886/1). By contrast, agricultural policy and Cohesion policy (Heading 1), as defended by a majority of countries, especially in the east and south of the EU (but also by France, as regards the CAP), have largely been preserved.
“Absolutely everything in this negotiation box goes in the direction of ‘Cohesion supporters’, and nothing in our direction”, lamented a northern European diplomat on Thursday.
Faced with this outcry, the Cyprus Presidency denied any favouritism, insisting that it had acted as a “true honest broker”. In Nicosia’s view, the cuts targeting funding for competitiveness, innovation, research and defence within Heading 2 should be put into perspective. In fact, these programmes had initially benefited from much larger increases in the European Commission’s draft compared with the 2021–2027 period.
“It is a balanced compromise, which has taken everyone’s voice into account and which, we hope, will be able to keep everyone at the table”, Cyprus Deputy Minister for European Affairs Marilena Raouna said on Thursday, on behalf of the Presidency.
To demonstrate the steps taken in the direction of the northern countries, Ms Raouna highlighted “the retention of excellence criteria” for businesses when it came to allocating grants from the Competitiveness Fund. These criteria are worrying the EU’s least developed countries, which fear that companies from the north and west of the EU will capture the bulk of the funding (see EUROPE 13885/4). A compromise still has to be found, however, on the manner in which the future Competitiveness Fund will operate. This issue, which largely overlaps with the divide between the “Friends of Cohesion” countries and the “frugal” countries, could be politically linked to the budget discussion as a whole.
Similarly, the Deputy Minister said she had “preserved the modernised architecture of the budget”. This was a reference to retaining the ‘National and Regional Plans’ (NRPs, under Heading 1), under which Member States will, in principle, have to carry out reforms and meet targets in order to receive their national envelopes progressively. This “performance-based” logic, however, is being called into question (see EUROPE 13883/21). A compromise text on the NRPs will fittingly be on the table for permanent representatives (Coreper) this Friday. “The Cyprus Presidency is striving to forge a compromise on the NRPs, but positions still remain widely divergent”, explained a European diplomat on Thursday.
The future of the “rebates”, the reductions in national contributions to the EU budget previously enjoyed by Germany, Sweden, Austria, Denmark and the Netherlands, is an uncertain factor in the wider political equation. The EU27 Heads of State or Government will seek to defuse this negotiation at the European Council on 18 and 19 June in Brussels. (Original version in French by Clément Solal)