Parliament ready to fight for a different EU budget

European Commissioner Janusz Lewandowski, responsible for Financial Programming and Budget, speaking yesterday in the Plenary of the European Parliament. (European Parliament photographic gallery).

European Commissioner Janusz Lewandowski, responsible for Financial Programming and Budget, speaking yesterday in the Plenary of the European Parliament. (European Parliament photographic gallery).

Last Tuesday 12 March, when the President of the European Council, Herman Van Rompuy, was addressing an invitation letter to the 27 EU leaders for the spring EU Summit of today and tomorrow, he couldn’t know the alarming outcome of European Parliament vote on the austerity EU Budget.This draft Budget features  a deficit for the first time in the history of the Union. Rompuy possibly expected the rejection, but there was no way that Rompuy knew the extent of the negative vote, with 506 parliamentarians rejecting the Budget, only 161 endorsing it and 23 abstaining.

With this decision the European Parliament rejected not only the 2014 budget, but the whole seven year fiscal exercise 2014-2020, for the entire package of European Union spending, called Multiannual Financial Framework (MFF). It has to be reminded that the 27 leaders in their winter summit at the beginning of last February had a very rough time concluding an agreement on the EU spending for this seven-year period. That agreement was then rejected right away by the four major EU Parliament parties with joint announcement. This was a rare, if not unique, occasion that the four main parliamentary political parties, the European People’s Party (EPP), the Progressive Alliance of Socialists & Democrats (S&D Group), the Alliance of Liberals and Democrats for Europe (ALDE) and the Greens/EFA Group agreed unanimously on such an important issue as the EU Budget.

Now however this political agreement between the four main European political parties, took the form of a decision/resolution in a Parliamentary plenary. This development triggers a procedure of negotiations between the Parliament, the Council and the Commission over the needed changes in the Budget, so as it can be accepted by legislators.

According to a yesterday’s announcement by the Parliament, “The resolution highlights the growing problem of payment shortfalls, which prevent bills being paid and jeopardize EU programmes. Last year’s shortfalls meant that several important EU programmes, such as Erasmus, the Research Framework Programme and the Social Fund ran out of funds early in the year…

The resolution gives Parliament’s negotiators a strong mandate to ensure that the MFF is flexible enough to allow available funds to be used optimally. Parliament also calls for a review of MFF spending, so as to give the newly elected Parliament and Commission an opportunity to influence the budgets that they will inherit from today’s legislators”.

What next

It seems then that the European Summit of the 27 leaders, despite the fact that they have very pressing business to attend today and tomorrow, like the turbulent relations with Russia and the financial crisis, their discussions will be forcefully focused on this Parliamentary ‘revolution’, returning to them, their difficult February agreement on the Budget as unacceptable.  What about the next steps?

The informal negotiations between the three EU institutions should result in a regulation laying down the MFF, for which parliament’s consent is required. The Parliament is negotiating the legal basis for various EU programmes in parallel, but for the Budget, the Parliament and the Council decide on the basis of co-decision. The announcement issued by the Parliament yesterday however contains also this very interesting paragraph, saying:“If there is no agreement by the start of 2014, the MFF ceilings from 2013, adjusted for inflation, will apply”. In short the Parliament is preparing for a long negotiation with the Council and the Commission.

Incidentally it has to be noted that if those negotiations drag on in length and continue well into 2013, there will be a need for an emergency Budget to take care of the 2014 expenses. In this case the Parliament observes in yesterday’s announcement, that the overall expenditure under a possible 2014 emergency Budget will equal to that for 2013 plus inflation. If this prospect materialises, the expenditure in 2014 will be much larger than provided by the austerity MFF 2014-2020, agreed by the 27 EU leaders in their February Summit. Seemingly this will be the Parliamentary line of negotiations. Very simply the Parliamentarians will tell the negotiators of the Council and the Commission, that if there will be no deal that the Parliament could approve, then the legislators would prefer that the European Union’s budget ‘flies on the Autopilot’. This will surely be a more generous option for the Peoples of the Union.

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