Parliament: No consent to EU budget until €11.2 billion unpaid bills are settled

Martin Schulz, President of the European Parliament (at the centre), Enda Kenny, Irish Prime Minister and President in office of the Council of the EU (on the right), and Eamon Gilmore, Irish Deputy Prime Minister and Minister for Foreign Affairs and Trade. They gathered for a discussion on the Multi-Annual Financial Framework (MFF) 2014-2020 and reached a political agreement together with the Commission President Manuel Barroso not pictured here. (EC Audiovisual Services, 27/06/2013).

Martin Schulz, President of the European Parliament (at the centre), Enda Kenny, Irish Prime Minister and President in office (until 30 June 2013) of the Council of the EU (on the right), and Eamon Gilmore, Irish Deputy Prime Minister and Minister for Foreign Affairs and Trade. They gathered for a discussion on the Multi-Annual Financial Framework (MFF) 2014-2020 and reached a political agreement together with the Commission President Manuel Barroso not pictured here. (EC Audiovisual Services, 27/06/2013).

The Plenary of the European Parliament in a non-legislative resolution accepted the political agreement on the Multiannual Financial Framework (MFF) for 2014-2020 that is the EU proper budgets for the next seven years. Negotiations over the next MFF commenced last February after the summit of the 27 leaders set the limit for the seven-year EU total spending at €960 billion. This is less than the previous MFF 2008-2013.

It is the first time that the EU budget is proposed to be set at an inferior level than the previous one. Real time bargaining however started on February 12, when the European Parliament rejected the decision/proposal of the European Council, in a rare unanimity between its four major political parties. Actually the President of the legislative Martin Schulz stated then that he will never sign such an MFF. That marked the beginning of a period of unusually strong frictions between the Parliament and the Presidency, that took at times unseen and unheard before dimensions and wording. The Irish Presidency, representing the EU Council, on many occasions went too far in pressing the Parliament negotiators.

After many months, negotiations led to an outcome, but not to an agreement on 19 June, that the Parliament deemed insufficient. At that time the Irish representatives falsely announced a consent. Negotiations resumed last week at the highest level in the run-up to the European Council of 27-28 June. EP President Martin Schulz, lead European Parliament negotiator Alain Lamassoure (EPP, FR), the Irish Prime Minister Enda Kenny, Foreign Minister Eamon Gilmore and European Commission President Jose Manuel Barroso struck a political agreement that won the backing of the main political groups in Parliament and the member states.

The Parliament secured the key priorities set out in its negotiating mandate. These include close to full flexibility to move idle funds (payment appropriations) between years and large flexibility for commitments, both between years and categories of expenditure, in order to make it easier to finance youth employment and research policies, the Erasmus for all programme, and support for small and medium-sized firms. This flexibility is needed to ensure that every EU budget euro is used where it is most needed, especially now that annual budgets will decrease.

Revision starts in 2016

According to a Parliament’s Press release a key achievement of the legislative “was to insert a “revision clause” in order to give the next Parliament and Commission a say on a budget that they would otherwise be stuck with until the end of their terms”. The Commission will present a review of the functioning of the MFF, taking full account of the economic situation at the time. Particular emphasis will be given to align the future duration of the MFF – currently seven years – with the 5-year political cycles of the EU institutions. The review will be accompanied by a legislative proposal for revision.

Paying 2012-2013 bills

A major issue was the unpaid bills of 2012-2013 budgetary exercises. The Council stated that it would deliver on its promise to settle the outstanding payments estimated at €11.2 billion. Member states’ economy and finance ministers will take a formal decision on the first tranche of €7.3 billion by 9 July at the latest and will decide in early autumn on a second tranche.

This was a key issue for Parliament as it wants to ensure that the 2014 budget – the first under the new MFF – is not eroded by old unpaid bills. To this effect the Parliament will not give its final consent to the MFF Regulation or adopt the 2014 Budget until this new amending budget of €11.2 billion, covering the remaining deficit as identified by the Commission, has been adopted by the Council. In reality the EU budget will remain in the air until those unpaid bills are settled.

An extra billion

In the final talks it was agreed that the Fund for European Aid to the Most Deprived would be increased from €2.5 billion to €3.5 billion. The additional €1 billion can be used by Member States on a voluntary basis for the food distribution scheme.

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