An all-out fight for the EU budget

European Parliament Committee on Budgetary Control – Discharge vote. (European Parliament audiovisual service 19/03/2013).

The European Parliament hardens its stance over the EU budget negotiations with the Council and the Commission. The legislative rejects the proposal of the Ecofin Council for parallel negotiations over the 2013 budget and the Multiannual Financial Framework for the 2014-2020 spending.

The three-way budget negotiations include the additional funds needed to pay for the 2012 unpaid bills, the 2013 gap in funding and the MFF 2014-2020 for the next seven budgets of the Union. EU’s proper finance is the major internal EU theme in which the Parliament has traditionally a special interest and an increased involvement, as provided by the European Treaties.

The Parliament has already contested the Commission’s proposal for an additional spending line of ‘only’ €7.5 billion to pay for the extras of the period 2012-2013, asking instead for €11.2bn, on the base of the unpaid bills of 2012 and the predicted gaps for this year. The legislators were even more aggressive in rejecting unanimously the spending limits for the next seven years, set some months ago by the 27 EU leaders at €960bn. Currently the Irish Presidency of the Council appears very active in bridging those differences, however without much success as it appears.

All together or one by one?

In view of the distance between the Parliament and the other two bodies, the Presidency of the Ecofin Council and the Commission during last week came out with press releases stressing that the three-way negotiations over the budgets should progress in parallel, including both periods 2012-2013 and 2014-2020. Understandably the Parliament wants more spending, while the Council wants to cut. The Commission stands somewhere in the middle.

Obviously this was a negotiations ‘tool’ by the Council and the Presidency. In the hope that while negotiating in parallel for the two periods, the Parliament wouldn’t be legitimised to ask for the maximum on all accounts. That’s why the Parliament yesterday came out with a very strong decision rejecting this parallel negotiation.

According to the relevant Press release issued by the legislators, the “Parliament wants a timely remedy for the 2013 budget shortfalls and is ready to intensify negotiations on the Multi-annual Financial Framework (MFF)… Parliament insists that the issue of the additional funds needed to pay this year’s and last year’s bills – €11.2 billion – must be resolved before concluding the MFF negotiations. Without a solution, the 2014 budget, the first of the new MFF, would start off with a deficit. The need to settle outstanding bills before agreeing on a fresh budget was stressed in a resolution adopted on 13 March by an overwhelming majority in Parliament”.

The same announcement added that, “These were the key conclusions of this morning’s (16/5/2013) European Parliament Budgets Committee meeting”. This position comes as a straight rejection of the decision reached earlier this week in the Ecofin Council of the 27 ministers of Finance, who theoretically pay for the EU budget.

The relevant press release issued by the Ecofin went like this,”The Council (Ecofin) reached a political agreement on draft amending budget for 2013, on the basis of a proposal from the Irish presidency. Draft amending budget no. 2 for 2013 is about meeting outstanding payment needs in the 2013 EU budget. The Council agreed to provide EUR 7.3 billion in a first stage”. In a second statement the Council stressed the “political nature of the agreement and declared to formally adopt its position on this draft amending budget at a later stage in parallel with the conclusion of the talks on the EU’s multiannual financial framework (MFF) for 2014-2020. Ministers stressed that nothing is agreed until everything is agreed”.

As things stand now, the legislative is standing firm on the position that “Parliament insists that the issue of the additional funds needed to pay this year’s and last year’s bills – €11.2 billion – must be resolved before concluding the MFF negotiations”. On the other side of the fence the Ecofin Council insists that “Ministers stressed that nothing is agreed until everything is agreed”.

The European Sting observed on 14 May that “The efforts to reach an agreement between the three most important EU bodies, the Council, the European Parliament and the Commission over the Multiannual Financial Framework 2014-2020 (and the 2013 budget), for the Union’s proper spending power, will test not only the cohesion of the EU but also the abilities of the ‘austerity lovers’ to wreak their policy options”.

In any case the only agreement concluded so far between the three EU institutional bodies is that negotiations on EU budgets must be concluded in June. The European Sting will be monitoring closely those procedures. Their outcome will set a benchmark in the ongoing confrontation between the ‘austerity lovers’ and the ‘relaxationists’.

In the former camp, though, Britain holds a distinguished position but the involvement of London in EU developments complicates the picture and obfuscates the drive for more spending for growth undertaken by most member states. The British government has many problems of its own in its relations with the EU. Earlier this week Prime Minister David Cameron got a strong blow from his conservative party eurosceptics, who introduced in the Commons a resolution demanding for a referendum to be held the soonest possible on the country’s position in or out of the EU.