Brussels, 14/12/2005 (Agence Europe) - On 14 December, the British Presidency unveiled its second draft compromise on the Financial Perspectives 2007-2013 (the EU's future budget). Negotiations will focus on the British rebate and a budget review. Despite rising pressure in recent days, the British Presidency refused to give ground on the British rebate, pointing out that it gave up EUR 8 bn over 2007-2013 last week (on 5 December). In a press release, British foreign secretary Jack Straw said the UK's new budget plan kept the rebate, which would increase from an average EUR 5 bn in recent years to around EUR 7 bn. He said all the EU's expenditure, including farm spending, would be reviewed in the period covered by the upcoming budget. In Brussels, a spokesperson for Tony Blair said the new budget plan was fair and balanced and the UK was convinced it was the best basis for agreement - there is very little room for negotiation. An outline of the new plan:
Expenditure. The compromise foresees spending up by EUR 2.6 bn to EUR 849.3 bn over seven years for commitment credits (expenditure), ie 1.03% of the EU's gross national income (GNI), up EUR 2.5 bn on the 5 December compromise (total expenditure of EUR 846.75 bn). Expenditure is down EUR 22.2 bn (2.5%) on the 17 June Luxembourg Presidency compromise (1.06% of EU GNI).
Competitiveness. Research, trans-European networks, education, single market and social policy. The British Presidency suggests keeping a EUR 72.01 bn package over 7 years, like the June compromise, adding that a Globalisation Adjustment Fund must be set up. The only change on the 5 December plan is more money earmarked for Slovakia (EUR 375 mil) and Lithuania (EUR 865 mil) for decommissioning nuclear power plants.
Cohesion. Structural Funds and the Cohesion Fund. The British Presidency is suggesting EUR 298.99 bn, EUR 2.1 bn more than in the 5 December draft, in other words 0.36% of EU27 GNI (as opposed to EUR 309.59 bn in June, 0.37% of GNI). It suggests an 80-85% increase in the EU co-funding rate for the ten new Member States, Bulgaria and Romania, and also for Greece and Portugal (not included in the 5 December version). These are the 14 poorest countries in the EU and the n+3 rule may be applied to them (giving them an extra year to use the aid). The British Presidency is also suggesting that these 14 countries will be allowed to continue to be allowed to claim non-refundable VAT as part of eligible co-funding as part of cohesion spending. (VAT will generally not be eligible for the other Member States.) The compromise also includes EUR 3.25 bn compensation for Spain for loss of Cohesion Funding, EUR 450 mil more than in the 5 December plan. This aid would be spread out over the seven years.
The British Presidency is suggesting sweeteners for most states with additional sweeteners like EUR 1 bn for Poland to take account of the zloty exchange rate over 2007-2013; EUR 206 mil for the five Polish regions where GDP per inhabitant is the lowest in the EU25; +/- EUR 100 mil for a poor region of Hungary; EUR 200 mil for Prague region; EUR 47.7 mil for Estonia; EUR 81.85 mil for Latvia and EUR 50 mil for the Spanish enclaves of Ceuta and Melilla in Morocco. These measures come on top of the figures set out in the 5 December compromise (namely more money for Cyprus, Sweden, Austria and ultra-peripheral regions, and EUR 200 mil for the Northern Ireland peace process).
Natural resources. The new compromise respects the October 2002 decisions on market expenditure and direct payments until 2013 (EUR 293.1 bn). Like the previous version, it foresees funding under this heading for all farm aid earmarked for Romania and Bulgaria, some EUR 8 bn. The rural development package is up EUR 340 mil on the 5 December plan, to a total of EUR 66.34 bn compared with EUR 74 bn under the Luxembourg Presidency. Some EUR 32.6 bn are earmarked for the ten new Member States, Bulgaria and Romania, leaving EUR 33.74 bn for the 15 old Member States.
The new compromise repeats the funding under the 5 December version for other headings, like freedom, security and justice (EUR 12.270 bn), the EU as a world player (EUR 50.01 bn) and administration (EUR 49.3 bn).
Own resources. The British Presidency is sticking to its 5 December proposal of a EUR 8 bn cut in the UK's rebate. The British Presidency has made an additional cut in the Dutch contribution to the EU budget (a EUR 850 mil cut as opposed to EUR 700 mil in the 5 December plan). The UK is suggesting that the Netherlands keeps 40% of the customs duties it levies on behalf of the EU, rather than 33% in the 5 December draft, or the standard 25% rate that currently applies across the board. There is also a small sweetener for Sweden.
Budget reform. The question of an overall rehaul of the budget (a 'revision clause' in the jargon) will be decided by the Summit later this week. The British Presidency is keeping its initial proposal of amending budget spending and income part way through the 2007-2013 period in line with a report published by the European Commission in 2008.
Most EU Member States have already rejected the UK's new plan for a variety of reasons. German government sources suggest that new plan is not tenable and a long-term solution to the British rebate is required. Polish prime minister Kazimierz Marcinkiewicz said that if the plan stayed the way it is, it would be vetoed by Poland. A spokesperson for Belgian prime minister Guy Verhofstadt said the plan lacked ambition and there were no new moves on the British rebate. Belgium feels the sweeteners proposed for the Netherlands are backward and discriminatory. The new scheme would give millions of euros a year in new funding for the Netherlands through the EU's biggest port (Rotterdam) but would not give Belgium (with the port of Antwerp) anything. French foreign minister Philippe Douste Blazy said the latest UK rebate plan did not provide a basis for an agreement acceptable to everyone. He said the British rebate was a historic anomaly and the focus of debate for everyone. He said the UK was not yet ready to play its full part in terms of shouldering the EU's financial burden and hoped this was not the UK's last word on the matter. Lithuanian prime minister Algirda Brazauskas said the new plan was unacceptable because Lithuania would lose EUR 580 in Structural Funding. A spokesperson for the Dutch prime minister Jan Peter Balkenende said the plan was a step in the right direction but had not quite gone far enough. A government spokesperson Henk Brons, quoted by AFP, said the new plan would mean a EUR 850 mil cut in the country's annual contribution to the EU budget, but this was not enough. The Netherlands want a EUR 1 bn cut. Spanish government sources commented that the new plan was a small step in the right direction.