Brussels, 26/11/2004 (Agence Europe) - After ten hours of talks (with many interrupted sessions), the Finance Ministers of the Member States of the EU, meeting in their "Budget" configuration, finally reached agreement with the delegation of the European Parliament on the main elements of the 2005 budget, such as the level of payment appropriations (106.3 billion EUR) and the mode of funding for agencies and aid to Iraq. These efforts were not in vain, as they pave the way for a swift adoption of the budget by the EP, in Strasbourg on 16 December. The Parliamentary delegation, which is made up of the President of the Committee on Budgets, Janusz Levandovski (EPP-ED, Poland), the rapporteur for the 2005 budget, Salvador Garriga Polledo (EPP-ED, Spain) and others, obtained major concessions from the Dutch Presidency, especially the abundant use of the budget's margins of flexibility (for Iraq, the Northern Ireland "Peace" programme and Community agencies). There follows an explanation of the main elements of the compromise between the branches of the budgetary authority:
Payment appropriations: The Council would have preferred the budget adopted by the EP in December to be close to its first reading of July (105.2 billion EUR, +5.4% compared to 2004, or 0.99% of EU GNP). The EP, however, attempted to bring the results closer to its vote at first reading (111.2 billion EUR). The parliamentary delegation attempted to obtain 108.5 billion EUR, but the Council refused. By way of compromise, the new Commissioner for the Budget, Dalia Grybauskaite, suggested 107 billion EUR. The Council's final offer was eventually accepted by the EP, at a level of 106.3 billion EUR (+6.5% compared to 2004, which is just above the symbolic barrier of 1% of GNP).
At a press conference which was held at around 10.45pm and attended by two journalists, the President of the Council, the Dutch Minister for European Affairs, Atzo Nicolaï, said that the payment appropriations issue had been "the main point of discussion with the EP". The Council "would like real assessments, in line with reality (…). We made a proposal, the Commission made a proposal which was slightly higher, then the Parliament presented its proposal. We reached this figure of 106.3 billion EUR (…), which is relatively close to the wishes of the Council", added Mr Nicolaï. He added that the EP had two good reasons to accept this offer: -it has obtained the mobilisation of the flexibility instrument; -it understood that it was impossible for the Member States to explain to their citizens that "we can spend more on the European budget next year". "Nor was it easy for the Commission to accept this proposal. But we have the role of mediator to play, and therefore we worked for an agreement", said Ms Grybauskaite afterwards. She said that the three institutions had adopted a declaration authorising the Commission to "consolidate the situation" if necessary, by amending the budget in the course of the year. "It was for this reason that the Commission agreed to a reduction of its initial proposal", she concluded. (It is worth noting that in its preliminary draft budget for 2005, the Commission had proposed 109.5 billion EUR in payment appropriations).
Flexibility instrument: this instrument will be used to find missing funds for external actions for Iraq, structural actions for the "Peace" programme and internal policies for Community agencies. "We would have preferred the instrument to be used neither for Iraq, nor for heading 3 (internal policies)", said Mr Nicolaï. "But this was part of the agreement with the EP. The use of the flexibility instrument must be possible for unforeseen problems. This remains the Council's position"', he explained.
External actions: the budget for the reconstruction of Iraq in 2005 will be 190 million EUR in commitment appropriations, as anticipated (192 million EUR in payment appropriations). 100 million of this envelope will come from the flexibility instrument (which means in short that there is a negative entry corresponding to this sum within the heading). The Council also obtained the desired budget for the common foreign and security policy (CFSP), of 62.6 million in commitment appropriations.
Internal policies: the EP called for recourse to the flexibility instrument for the 54 million EUR needed to set up twenty new Community agencies in 2005. The Council agreed to use it to the tune of 40 million EUR (the extra 14 million will come from a reduction in certain programmes for SMEs, a suggestion made by Mr Garriga Polledo).
Structural actions: as indicated (yesterday's EUROPE, p.13), the Community institutions reached agreement reasonably quickly in the evening, on a (complex) solution to pay for the continuation of the Northern Ireland "Peace" Programme in 2005 and 2006. In 2005, the budget will be 60 million EUR (45 million EUR from the flexibility instrument, 10 million EUR from the national contributions of the EU and Ireland, and 5 million which the Commission will find in the Community budget.
In 2006, estimated spending will be EUR 48 million (EUR 16 million from the Community budget and 32 million in contributions from the United Kingdom and Ireland). In a declaration, the Commission pledges, where necessary, to provide a little over EUR 16 million.
Pre-accession aid: Funds under the programme for the northern part of Cyprus have been transferred, as the Commission and Council wished, from Heading 4 "External Actions" to that for pre-accession aid (Heading 7). The programme amounts to EUR 114 million for 2005, plus the 6 million foreseen in 2004, which could not be paid. The 120 million is placed in the reserve pending adoption of a legal base creating the programme. Aid in favour of Croatia amounts to EUR 105 million for 2005, one part of which (65 million) also comes from a transfer of funds from Heading 4 to Heading 7.
Agriculture and Fisheries: The Council has not accepted the Commission's correcting letter providing for reduction of EUR 221.5 million in agricultural market spending. It has re-established the linear reduction of one billion euros from the funding proposed. This is the first time that the reduction foreseen by the Commission (in its correcting letter) was below that decided traditionally in first reading by the Council - which, of course, explains the Member States' refusal of this correcting letter. Two elements of the correcting letter were nonetheless accepted by Council: - pilot projects requested by the EP (EUR 500,000 for the promotion of the quality of products, and EUR 500,000 for the creation of a model of financing of risks relating to epizootics); - and making available, under Heading 4 External Actions, EUR 2.5 million for fisheries agreements with third countries (Community vessels have fished more than foreseen in certain protocols, which requires compensation for these countries).
Budget 2004: As announced (yesterday's EUROPE, p.13), the Council came to an agreement on the draft correcting budget (No11/2004) concerning Structural Funds (EUROPE of 15 October, p.15). Member States are finally expected to provide EUR 500 million in additional payment appropriations for the current budget (2004).
CSU member Markus Ferber commented: This negotiation has been a success for the Parliament, which has been able to impose its political priorities, and is a "Waterloo for the Council".