Brussels, 06/12/2005 (Agence Europe) - Ahead of the agreement of the European Council next week, the foreign ministers of the EU are meeting for a conclave in Brussels on 7 December to examine the initial compromise of the UK Presidency, which has already created a certain amount of controversy, on the forthcoming financial perspectives. It provides for a total budget of 846.75 billion EUR in commitment appropriations (1.03% of the gross national income of the EU), a reduction of 2.84% compared to the last proposal of the Luxembourg Presidency, which was presented at the European Council of June.
Competitiveness (research, trans-European networks, education, integrated single market and social policy): the compromise provides for 72.01 billion EUR over seven years, as per the June compromise, or 7.5% of annual growth in 2006.
Cohesion (cohesion policy): the Presidency proposes 296.90 billion EUR in total, which corresponds to 0.36% of the GNI of the EU of 27, as opposed to 309.59 billion in June (0.37% of GNI). Compared to the June compromise, the Presidency reduces the funds for the new Member States by almost 14 billion EUR. The envelope will stand at 150 billion EUR for them, including 56 for Poland, 23 for the Czech Republic and 22 for Hungary. "The total amount of allof the programmes of the EU in favour of the 10 new Member States will still represent twice the sum total of the Marshall plan granted to Europe by the United States 60 years ago!", commented Jack Straw. In return for this reduction, the Presidency is proposing an increase of between 80 and 85% of the rate of Community co-funding for the 10 new Member States and for Romania and Bulgaria, and the implementation of an n+3 rule for these countries (allowing them to have an extra year to spend this money). Until now, "the new Member States have been unable to spend all of the funds allocated to them, for various technical reasons", Mr Straw explained. The compromise provides for compensation of 2.8 billion EUR in favour of Spain for its losses under the cohesion fund, which is the same amount as that put forward in June.
Natural resources (agriculture, rural development, fishing and environment): the compromise respects the decisions taken in October 2002 on setting market expenditure and direct payments until 2013. The June compromise provided to finance 6 of the 8 billion EUR in agricultural aid earmarked for Romania and Bulgaria out of this column. The Presidency proposes to pay for the entire envelope (i.e. all 8 billion) out of this heading, which explains why there is a reduction in agricultural expenditure to the tune of 2 billion (compared to June). The envelope for rural development stands at 66 billion, which is a drop of 10.8% compared to June. Furthermore, the Presidency suggests introducing the possibility of transferring up to 20% of agricultural aid (market in direct payments) to the heading of rural development for any country which wishes to do this, which, according to the Commission, will bring about the "danger" of a "renationalisation of the CAP". For fisheries, the Presidency proposes 3.8 billion EUR (as against 3.9 in June).
Liberty, security and justice (asylum, immigration, border control, terrorism…) the Presidency takes up the June totals (6.63 billion EUR). For the other internal policies (culture, youth, audiovisual issues, health and consumer protection), it proposes 3.64 billion (4.37 in June).
The EU as a world player (pre-accession, stability, development cooperation, neighbourhood policy and humanitarian aid): the Presidency tables a budget of 50.01 billion EUR, unchanged from June.
Administration: the Presidency suggests a reduction of one billion EUR (a total of 49.3 billion) compared to June. According to the Commission, it would be impossible, with this kind of budget, to "complete the integration of Romania and Bulgaria".
Own resources: recognising "its responsibility for taking its fair share of the costs of enlargement", the Presidency proposes, for the first time ever, a reduction of the rebate it enjoys. France pays for 29% of the British rebate, ahead of Italy (24%), Spain (14%), Germany (7%) and Belgium (5%). This would mean that the British contribution to the budget to the EU would rise from 50 to 58 billion EUR over the period in question, said Mr Straw, who noted that in June, London had rejected the Luxembourg proposal, the effect of which was to add 20 billion EUR to its invoice. The proposed compromise provides two options for the British rebate. Under the first, the British would agree to give up 8 billion EUR (over the period 2007-2013) of the envelope they receive in virtue of their rebate, increasing the calling rate for the VAT resource for the United Kingdom. This would mean that the contribution of the other Member States to the rebate would be reduced by the same level. The Commission pointed out that this option would reduce the sum total of the British rebate by just one billion EUR per annum over the period 2007-2013, whose total contribution would rise to an average of 6.1 billion a year over this period, compared to 5.4 billion in 2004 and 7.7 billion, on average, over seven years, if no changes are made to the system. Mr Straw stated that the British cheque would go from an annual average of 5 billion over the current period (2000-2006) or 7 billion during the next period of the financial perspectives. Under the second scenario, the Presidency suggests deducting X% of the expenditure of the new Member States under the cohesion policy from the calculation of its rebate. The higher the figure X, the greater the reduction of the British rebate.
Reform of the budget: the Presidency proposes that the EU review the financial framework, including agricultural expenditure and the British rebate, during and after the period 2007-2013. In order to do this, the Commission would have to submit a report to the European Council in 2008 on reforms which could be introduced in the period 2007-2013.
Initial reactions fell rather on the negative side. José Manuel Barroso, President of the European Commission, said that as it stands, the proposal of the UK Presidency "is unacceptable". "This proposal proposes a budget for a miniature Europe, not a strong Europe, which is what we need", said Mr Barroso, who feels that "in particular, the proposal must be made fairer towards the new Member States". In an article published on 6 December by the Greek daily newspaper Elefthéros Typos, the president of the European Parliament, Josep Borrell, said that the "first to lose out" from the compromise of the UK Presidency would be the 10 new Member States of the Union, because the reduction of the budget to 1.03% of EU GNI would affect "the cohesion policies above all". Mr Borrell also criticised the "exclusively accountancy-based" logic of dividing up the Member States into "contributors" and "receivers" (EUROPE will return to the extremely negative conclusions voiced by most of the members of the European Parliament). The Hungarian Prime Minister, Ferenc Gyurcsany, described the proposal as "disappointing" for the new Member States, his spokesperson, Boglar Laszlo, announced on Monday. According to the Swedish Secretary of State, Lars Danielsson, the compromise "is unacceptable", particularly as it relates to the size of the Swedish net contribution to the budget of the EU. In the view of the Swedish Prime Minister, Göran Persson, the proposal does, nonetheless, go in the right direction, in that it reduces the total volume of expenditure. In a press release, France declared that "these proposals do not seen likely to lead to an agreement which is desirable by all". "Only the exclusion of a proportion of cohesion expenditure for the new Member States from the calculation of the rebate is proposed, and this is only temporary and very limited. The refusal to exclude the majority of the cost of enlargement from the calculation of the British rebate is unacceptable, from a financial point of view and from the point of view of solidarity and of fairness", said France (our translation). Under these circumstances, Paris calls upon the UK Presidency to agree to a "substantial and sustainable reform of the British rebate with relation to the costs of enlargement, a reform without which no fair agreement on the financial perspectives is possible". "This is a bad proposal", said the Polish Prime Minister Kazimierz Marcinkiewicz on Tuesday, even though he can see possibilities for improving it, despite the shortness of time. The day before, Mr Marcinkiewicz had stated that the proposal was "unacceptable". The Portuguese minister for foreign affairs, Diogo Freitas do Amaral, regretted the fact that with this text, "the rich countries win and the poor countries lose out". He added that the proposal "reduces the EU's potential for action, and does nothing to make the Union more competitive, more modern, more united and more present on the international stage". The Prime Minister of the Czech Republic, Jiri Paroubek, said that the proposal did, nonetheless, deserve to be discussed, and recognised that although the compromise provides less money for his country, it provides greater flexibility on the attrition rules for the structural funds.
Denmark admits that it was "disappointed" with the British proposal for three reasons, a Danish diplomat explained: a "lack of solidarity" towards the new Member States, a British rebate which is still too high and a budget which is still not "modern" enough, particularly for research and development. The Estonian Prime Minister, Andrus Ansip, said on Tuesday that the British proposal "was not the best basis" to reach an agreement, "but we will have to work with it, because it is the only proposal we have". He called for "well-balanced, fair and modern financial perspectives, which are based on solidarity". "Estonia wants an agreement, but not at any price", warned Mr Ansip. Mr Barroso, who was alongside Mr Ansip before the press, called on the British to make "a small step" towards a compromise which all could accept. "A small step on the part of the UK Presidency may be a giant leap for the enlarged EU, particularly for the new Member States", he said. The entire British rebate represents just 0.27% of United Kingdom GNI, whereas a reduction of 10% of structural aid would deprive Estonia of the equivalent of 0.40% of its GNI, Mr Barroso explained.