The lack of progress was predictable, but… It would have been naïve to expect progress in the negotiations on the EU financial perspectives 2007-2013 this week. A few days ahead of the referendum on the Constitution in two Member States, and after the German decision to move the elections to the Bundestag forward to the autumn, there was never going to be a significant concession made. With all eyes riveted to national public opinion, each State was moving towards a tightening of its position. The Luxembourg Presidency put a favourable spin on the blockage, describing as “encouraging” the fact that none of the negotiators was satisfied with the second presidential compromise: this, in the view of Jean Asselborn, is the proof that this compromise is going in the right direction, because everyone knows that at the end of the day, concessions have to be accepted, which people may not be ready to make. Thus encouraged, Mr Asselborn said that he was relatively optimistic about the possibility of an agreement next month; but Jean-Claude Juncker seems more sceptical. Those who are old enough to have known the two “Delors packages” must remember that these negotiations were no easier. But at the time, circumstances were more favourable, net contributors being more able to accept their financial burden and public opinion being less distrustful. Most of all, there was not the current uncertainty about the willingness of certain founder countries to pursue European integration.
The solution from the revenue point of view? Let's leave the forecasts aside and go back to the current state of play with the dossier. Beyond the figures themselves (on which the respective positions will only start to coincide on the final phase), I credit the following sentence by Mr Asselborn (in the press release of Monday evening, our translation) with an awful lot of sense: “We have to start talking seriously about own resources. This aspect is an incontrovertible part of any agreement”. It is indeed increasingly clear that the Member States feel that the way in which they contribute to expenditure is at least as important as the way in which the funds are spent. In this column I have already (bulletin 8946) referred to the overtures of the three main “net contributors” (Germany, Netherlands, Sweden), who see that the current situation is weighted in their disfavour and is therefore unfair. As for the United Kingdom and its infamous rebate, the Chancellor of the Exchequer Gordon Brown said that this will be up for discussion as and when agricultural and cohesion policy expenditure have been considerably reduced in the European budget. We're seeing an ever tighter dovetailing between the expenditure and revenue planks as elements of the negotiations.
This led the Presidency to bring a mechanism into its latest compromise which will, in practise: 1) set the British rebate for 2007 on the basis of the average of previous years, and then reduce it gradually; 2) look at the same kind of refunds for the three “excessive contributors” Germany, the Netherlands and Sweden for the period 2007-2013, to be funded by all the other Member States; 3) freeze at 0.3% the percentage of the “VAT resource”; 4) ask the Commission to present a general re-examination of the system of own resources in 2010, including the option to create autonomous own resources. You may remember that in its proposal of July 2004, the Commission suggested a general compensation mechanism for the excessive contributors (the ceiling for each country would be 0.35% of its GDP, the surplus being paid back in a 66% proportion with an upper limit of 7.5 billion EUR) and a system of own resources based not only on a percentage of VAT revenue, but also on taxation of energy or company revenue).
When? On expenditure, some feel that the total volume proposed is too high, others think it's too low, with specific criticism, column by column, depending on the individual interests. To the comments in our bulletin 8952 we might add that the Italian minister Gianfranco Fini said that a reduction of credit for the Mezzogiorno, which the Luxembourg compromise would see fall from 23 billion for the period 2000-2006 to somewhere between 15 and 17 billion, was unacceptable; but Mr Fini felt the Commission's proposal of 19 billion was “well-balanced”. The Commission, for its part, criticised the Luxembourg package as “inadequate to realise the ambitions at hand”, but unofficially, a few reductions may be considered possible for cohesion (the financial commitment would go from 0.414% to 0.38% of the global revenue of the EU) and, according to some, for research (without compromising the objective of the Lisbon Strategy). Everything remains to be negotiated, revenue plank and expenditure plank, together. But when will a compromise be ripe? If France rejects the Constitution, the ambitions will drop likes tones. We'll just have to wait and see.
(F.R.)