Compromise to be found. If each Member State sticks to its priorities and its “specific characteristics” on the Union's financial perspectives for the period 2007-2013, there will be no agreement by the end of June. The summary of national positions on the funding of the cohesion policy (see this column yesterday) explains why Jean-Claude Juncker was in a bad mood. I would like to add a few considerations, taking account of the vote of the ad hoc committee of the European Parliament (see our bulletin yesterday).
It is clear that if the new Member States become the main beneficiaries of the cohesion policy (and everyone agrees that they should be), then the others will have to agree to make sacrifices. Ireland's attitude is ideal, as it is proud that it is soon to become a “net contributor” to the Community budget, because this means that the progress it has made, thanks in large part to the EU, allow it to take its place among the most prosperous Member States; it enjoyed the support of the others for as long as it needed it, and it is now prepared to make its contribution to helping less favoured Member States. However, the attitude of the other Member States must also be understood, both those who are still facing serious regional problems and those who feel that their contribution to the cohesion policy is excessive. The problem is that they can all see the issue that concerns them, and not the one that affects their neighbour. Spain and Italy take the view that a drastic reduction in the funding they currently receive would, in practice, have the effect of transferring most of the costs of this recent wave of enlargement onto their shoulders, which would be unfair. These two countries, and the other current beneficiaries of the policy, state that in several cases, the apparent improvement in their situation is due to nothing more than statistical smoke and mirrors. These regions have climbed above the threshold of under-development because average community GDP fell with the arrival of the new Member States, not because of any significant development on the ground.
Cohesion policy remains European, but… Generally speaking, we must not forget that the formula recommended by the British government, and endorsed by a few other governments, was, in practice, rejected in the preliminary debates. This would have entailed radically pruning the cohesion policy, by paying funds only to the least favoured countries of the EU. The other current beneficiaries would use their own national budgets to fund support for their regions lagging behind, whether the Mezzogiorno, the eastern Länder, Corsica or Hainaut. The battle of ideas surrounding this formula had been bitter, but the superiority of a European policy financing, organising and coordinating regional cohesion ended up winning the day, with the support of the Committee of the Regions and of regional and local associations and organisations, and the sub-heading “cohesion for growth and employment” became the largest of all, overtaking the common agricultural policy.
Taking account of the positions summed up in this column yesterday, the conclusion is simple: there will be no agreement on the content of the cohesion policy until there are reciprocal concessions between: a) the current beneficiaries, who cannot remain so in the future; b) the countries of central and eastern Europe, who will become the main beneficiaries but will have to tone their demands down somewhat; c) the net contributor countries, who will have to use another means than economies (for example, by arranging a debate on Union income: see further on) to seek a better way of balancing out the burden. Nor will there be an isolated solution on this issue: the political agreement sought for next month can by definition only be an overall one, covering all of the “perspectives”, as the only formula guaranteeing balance. By entering a “general reservation” on the Luxembourg compromise on the cohesion policy, the President of the European Commission, José Manuel Barroso, made it quite clear that the Commission is prepared to take position only on the whole.
What remains to be clarified for agriculture. On the agricultural chapter of the “perspectives”, there's not a lot to say, because the level of expenditure for the management of the markets and direct aid has already been set. The European Council did this unanimously in October 2002 for the whole of the period (i.e. right up to the end of 2013), and its decision has not been challenged by the Parliament. The figure retained is a fair bit down in terms of percentage of the budget (although the Böge report feels that it still represents a disproportionate volume of credit), because it will only correspond to around 35% of the total. Added to this will be the Rural Development Fund, which does not relate specifically to agriculture but to the whole of the European territory outside cities (some 80% of the Union's territory!) and will fund the programme Natura 2000, the hub of the EU's action for the environment, together with the Structural Funds.
In principle, none of this is under fire, either in the Council or the European Parliament. The only point on which significant differences of opinion remain is the possible co-funding of a proportion of CAP expenditure by the Community budget and by the national budgets of the Member States, to free up extra resources for other priorities. Some Member States are in favour, others opposed. Within Parliament, the rapporteur Reimer Böge suggested it, and reactions were mixed. There was a majority in favour within the ad hoc committee, but with a few reservations and conditions; the results of the plenary remain to be seen. Those who opposed it did so partly for ideological reasons (not wanting to see a renationalisation of the CAP, which is rejected as a concept by everyone), but it'll come as a surprise to no-one if I say that once again, the motivation is mainly financial. The letter (made public three days ago) from Mariann Fischer Boel, Commissioner for Agriculture, with a table containing figures in the annex (see our bulletin 8944), states who wins and who loses: national funding at the level of 10% for direct aid would, for the seven years between 2007 and 2013, cost France 1.4 billion EUR, Spain 1.3 billion, Greece 1.12 billion, lower figures for Ireland, Portugal, Denmark and Finland, to the advantage of Germany, Italy and the three Benelux countries. Now, can you guess which countries are in favour and which are opposed…?
A second controversial element in the “agriculture” heading relates to covering expenditure for Bulgaria and Romania once they join. Should this be covered by the 2002 compromise between the heads of government? The ad hoc parliamentary committee took position in favour, but we'll see what the plenary says.
Parliament's choices. Mr Juncker, incidentally, attaches enormous importance to the opinion of the European Parliament, and loses no opportunity to remind the Council that the EU is in a Council/Parliament codecision regime. He was somewhat disheartened, however, by his meeting with the parliament on 26 April, because he noted that they were just as eager to defend their national positions as his colleagues in the ministerial debates the day before, so much so that he told the MEPs that he didn't need to look at the speakers to know where they were from: he just needed to hear their demands. Despite a few other manifestations of “priority defence of national interests”, the Parliament's contribution is essential: there will be no “perspectives” without its agreement. The work of its ad hoc temporary committee concluded in a positive spirit taking account of global European interests, by broadly following the Commission's views, but by making partial changes to the priorities and by reducing the overall envelope. We must hope that on 9 June, the plenary session will smooth over recent disagreements in the same spirit.
The parliamentary vote in committee calls for a few considerations. The rapporteur Reimer Böge would like to avoid any spending overbid, and most agreed. The ad hoc committee retained the percentage of 1.07% of Union GNI for the overall envelope of payment credits, which is halfway between the ceiling demanded by the most rigorous Member States (1%) and the Commission's proposal (1.14%). How could the ad hoc committee have been able to respect this percentage whilst taking account of its own more ambitious wish-list for certain headings? Partly by taking precautions or via shrewd accounting, keeping certain expenditure outside the budget (like the European development fund for the ACP States), but partly also with a few reductions here and there. The statements of Josep Borrell, President of the Parliament and also of the ad hoc committee, and those of leaders of the political groups, refer to the reduction in the institutions' administrative expenditure, but they leave in their wake the reductions brought in in such places as the “competitiveness” sub-heading, which need to be explained to avoid giving the impression of attributing less importance to the Lisbon Strategy. This is a delicate aspect, and I intend to clarify it.
And the “revenue” plank? Just another few words on one essential element of the dossier: that of revenue. Jean-Claude Juncker will discuss it this weekend with the finance ministers of the twenty-five, in the informal session of the Ecofin Council. We must not forget that the financial ministers of three Member States, Germany, the Netherlands and Sweden, who feel that they are paying too much towards Union expenditure, carried out a procedure two months ago to criticise the imbalance (see our bulletin 8907). As a percentage of their GNI, these countries are the main net contributors to the Community budget, although they don't come out top in terms of revenue per head of population. They are calling for this to be corrected by making changes to the system of Union revenue (what the Member States put into the European budget), independently of expenditure, on which they had already taken position by signing the letter of the Six who called for the 1% ceiling to be respected. The “revenue” aspect also includes the infamous “British rebate”. Alain Lamassoure suggested that the national parliaments get involved in the debate on this, because Union revenue is the national expenditure these parliaments are responsible for, and Mr Juncker has agreed to this in principle. (F.R.)