The Council unblocks all EU budgets

Eurogroup meeting of 14/10/2013 in Luxemburg. (Council of the European Union photographic library).

The Permanent Representatives Committee of the European Union (COREPER) approved yesterday an increase of the 2013 EU budget by €3.9 billion in order to cover outstanding payment needs. This amount complements the €7.3bn of the draft amending budget no. 2 approved by the Council on 9 July. The Council’s position on this draft amending budget is subject to the European Parliament’s consent to the regulation setting out the EU’s multiannual financial framework 2014-2020, which foresees the spending limit of the entire EU for the next seven years.

The Permanent Representatives Committee is something like the ‘deep state’ of the European Union. Its 28 ambassadors are the long arm of governments and theirs is the decisive word. They always remain in the background, despite constituting the core decision-making body of the Council of the European Union (member states). Their role is to prepare the decisions of the Council but once agreed in the COREPER, the ministers just undersign them. This Committee was convened yesterday only hours ahead of the Eurogroup and one day before the ECOFIN Council, which meets today 15 October. The 17 and the 28 ministers of Finance making up the Eurogroup and the ECOFIN councils are direct bosses of the Permanent representatives.

Paying old and new bills

The COREPER also approved the mobilisation of €400.5 million in commitments and payments out of the EU solidarity fund to the benefit of Germany (€360.5 million), Austria (€21.7 million), Czech Republic (€15.9 million) and Romania (€2.5 million). This extra EU aid is meant to support Germany, Austria and the Czech Republic which have suffered from floods, and Romania, which suffered from drought and forest fires during the summer months. The large amount provided to Germany might have been a condition Berlin has set in order to accept the increase of 2013 EU budget by €3.9bn. The fact that both those subjects, despite being many months old, are now ‘packaged’ together and offered to Parliament for approval in an ‘all or nothing’ arrangement, is what points to this conditionality.

Coming back to this extra €3.9bn to pay EU’s outstanding bills pending even from 2012, its adoption was a long-expected step. This was made a precondition by Parliament for its final approval of both the 2014 EU budget and the Multiannual Financial Framework 2014-2020 which fixes the EU’s spending ceiling for the next seven years. Today the ECOFIN council is expected to give the green light for this extra €3.9bn 2013 budget along with the green light for the €400.5 million from the solidarity fund. Both draft amending budgets then need the approval of the European Parliament. However after the COREPER’s approval of the additional €3.9bn the legislative’s consent must be considered as given.

According to European Sting writer Suzan A. Kane’s article published on October 3rd, “This is money owed to local authorities, other civil entities and private operators for having completed projects co-financed by the EU. Legislators fear that member states (the Council) aim at paying those bills with 2014 money, reducing further in this way the availability of credits for next year. (In view of this) The three major parties of the Parliament EPP, S&D and ALDE have made clear that there won’t be any approvals for the 2014 budget or the 2014-2020 EU spending ceiling (Multiannual Financial Framework), if the Council doesn’t cover the €3.9bn in overdue obligations”.

The Parliament will concede

It’s important to notice that the COREPER and the ECOFIN councils have in a way ‘packaged’ the two additional expenditure items so as the Parliament has to consider and presumably approve them together. Presumably the legislators would be obliged to either approve or reject both as a ‘package’ at the same time. It must be noted also that the Council has made its own approval of the extra €3.9bn on the House’s positive vote for the 2014-2020 seven-year EU spending ceiling.

The problem is that the €360.5 mln set aside for Germany by the COREPER yesterday and expected to be approved by the Ecofin today, seem disproportionate in comparison to similar previous cases. This is a proof that Germany is now negotiating every single EU spending item on a strictly ‘give and take’ basis. It is possibly an indication of Germany’s stance in other more important issues like the enactment of the European Banking Union.

Given that the issue is scheduled for vote in the 23 October plenary of the European Parliament, the Council rushed to fix it. Otherwise the legislative would have withheld its approval for all EU budgets. In this case there was a real danger for the Union to be left without a budget on 1 January 2014. It would have been a similar affair as the current shut-down of some US public services, after the House of Representatives cut off a part of the American administration’s financing.

In any case, the Parliament is now expected to approve all EU budgets, the one for next year along with the budgetary platform for the next seven years.