Punchestown, 05/04/2004 (Agence Europe) - Change of decors, but same tune - European finance ministers confirmed their views on the Financial Perspectives for 2007-2013 at the Council meeting in Punchestown this weekend. The six signatories of the letter calling for European budget discipline (along with Denmark) are still calling for the EU's budget to remain from 2007 onwards below 1% of Gross National Income (GNI), saying that the EU cannot consider increasing spending when six states have excess budgets and calling for structural funds to focus on countries which have the greatest need. Spain, Portugal and Greece say the Commission's draft Financial Perspectives are just a "minimum". Belgium and Luxembourg, along with the Commission, are calling for the EU's budget policy to be 'coherent' with its political ambitions.
For the moment, Member States are divided, and negotiations will continue for at least another year, possibly longer, commented the President of the Council, Charlie McCreevy. Today's discussions will enable the Irish Presidency to work on progress in the next three months, he added. Negotiations are continuing at Permanent Representative level. The Permanent Representatives will be preparing a report for the European Councils on 17 and 18 June.
Budget Commissioner Michaele Schreyer noted that the Commission's Communication on the Financial Perspectives foresaw payment credits at 1.14% of GNI on average (including the European Development Fund and the European Solidarity Fund) or 1.10% (excluding them) (see EUROPE of 11 February, p. 7). The ceiling would be 1.24% for commitment credits. The Commission's proposal sets out political priorities in line with the choices and pledges made by the European Council. The President of the Commission, Romano Prodi, said that if the budget had to be cut, policies would have to be cut. He said it was important to respect the Common Agricultural Policy agreement and new pledges with regard to justice and home affairs. The commitment to respect the 3% ceiling for budget deficit was not jeopardised by these proposals since in 2007 all Member States will be close to balance in line with their commitments and would therefore have great room for manoeuvre for coping with this increase and other political objectives they might have at that time, he added.
The Commission's comments seem to have come up against a brick wall. German finance minister, Hans Eichel, opened fire by saying he rejected the Commission's proposals because they are not balanced. Restricting credits to 1% does not mean freezing expenditure, he said, because we are in growth. Eurogroup has said that the budget deficit of six countries outstrips the 3% ceiling, so it would be contradictory to increase the EU's budget while at the same time calling for a cut in national budgets, said Hans Eichel. This was repeated, virtually word for word, by the United Kingdom, the Netherlands, France, Sweden, Denmark and Austria. The new French economics minister, Nicolas Sarkozy, qualified this, saying that France wanted to keep to the 1% limit, unless this contradicted with cutting deficits, but was prepared to discuss it. Swedish finance minister, Bosse Ringholm, said he opposed increasing budget flexibility, as called for by the Commission, in the name of budget discipline.
The seven countries called for the EU's budget to focus on essential priorities - competitiveness in line with the Lisbon Agenda, and aid for the countries needing it. We should focus on the Lisbon Objectives but stick to the 1%, said British finance minister Gordon Brown. The same ideas with regard to the Lisbon Agenda were expressed by Denmark and Austria.
Danish finance minister Thor Pedersen said it was necessary to focus structural aid on the poorest countries, where it was most needed and there would be the greatest impact on growth. Nicolas Sarkozy said that more money wasn't needed, but no less solidarity. He told reporters that spending more money means less solidarity because money is distributed on the backs of others. He said aid should go to countries with the greatest need to stimulate development, consumption and therefore overall growth in Europe.
Calling for strict discipline, the Danish finance minister raised the issue of farm spending in passing. The 2002 CAP agreement means that there will be a slow but substantial phasing out of spending, which will give us a EUR 10 billion margin, enough to fund the EU's new targets if we remain at the 2006 level of spending, he told Danish reporters.
After this battery of counter-arguments, Spain, Portugal, Italy and Greece defended the Commission. The 1.24% ceiling is a minimum for meeting the EU's challenges, said outgoing Spanish finance minister Rodrigo Rato. We could accept a 1% ceiling if all policies are reassessed, not just Cohesion Policy, he said, hinting at the CAP and the British refund. His ideas were echoed by Italian minister Giulio Tremonti, who said he could agree to the 1% ceiling if all EU policies were reassessed. Portuguese finance minister, Manuela Ferreira Leite, called for Cohesion Policy to be kept in all Member States, with solidarity not being the exclusive right of some Member States. The Belgian and Luxembourg finance ministers said that the political objectives should be set first, and then the budget. Doing it the other way round would be putting the cart before the horse and this was not common sense, said Luxembourg prime minister and finance minister, Jean-Claude Juncker. Belgian finance minister Didier Reynders told reporters that Member States were in the process of transferring powers and hence adapting their budgets to change, and this had to be taken account of. He joked about six Member States saying one has to be strict about the EU budget since they must thing that too about national budgets. So he imagined, at least.