2014 budget: The EU may prove unable to agree on own resources

Alain Lamassoure, Chairing of the plenary of the European Parliament in Strasbourg, where the President of the Commission (on the right-forefront) delivered his State of the Union speech. (EP Audiovisual Services 11/09/2013).

Alain Lamassoure, Chairing the plenary of the European Parliament in Strasbourg, where the President of the Commission Manuel Barroso (on the right-forefront) delivered his State of the Union speech. (EP Audiovisual Services 11/09/2013).

The last fight in the ‘war’ over EU’s proper budget for 2014 is bound to take place this Monday 11 November, after the European Parliament got what it wanted for the 2013 budgetary exercise. For this year’s budget the unpaid bills of 2012 and 2013 totalling at €11.2 billion were at stake, having been now arranged. Whatever part of that amount was to be left unpaid until 31 December, it would have burdened the 2014 budget, thus undercutting the already restricted EU resources for next year. Let’s follow the story from the beginning.

Earlier in the year, the Commission estimated it would run short of €11.2bn to pay its outstanding obligations during 2013 also including some unpaid bills of 2012. By July 2013 the member states, that is the Council, agreed to pay only €7.3bn of the above amount. Legislators expressed their anger over this, because they sensed that the Council wanted to cover the gap of €3.9bn from the already slashed 2014 allocations. Last month the Council was forced to approve the rest of the outstanding payments amounting to €3.9bn.

2013 differences resolved

With the holes of 2013 covered, there is still a big difference between the Parliament and the Council over the 2014 budget. This has to be resolved by a Conciliation Committee, made up by the 28 representatives of the member states and 28 legislators. The first meeting of this Committee was convened on 4 November. During that meeting, the Council proposed to “keep the level of the 2014 EU budget in line with member states’ financing capacities”. This meant to limit payments to €135bn and commitments to €142.23bn. The European Parliament asked to increase the payments by €1.4bn and the commitments by €855 million as compared to the Council’s position.

The next meeting of the Conciliation Committee is set to take place on Monday 11 November, the same day as the ECOFIN (Budget) Council is set to meet, in order to settle the difference for the 2014 EU budget. For the ECOFIN to ‘bless’ the 2014 budget though, there has to be an agreement in the Committee. The second meeting of the Conciliation Committee was to be preceded and prepared by a trialogue (i.e. meeting between representatives of the Lithuanian presidency, the European Parliament and the Commission) on 7 November, that is, yesterday.

The 2014 budget gap remains

Late last evening, after this trialogue was over, Alain Lamassoure, Budgets Committee Chair of the Parliament, spoke of a stalemate. He stated “After the three-way talks…a first step has been taken towards solving the Union’s immediate budgetary problems”. But then he added ““What is at stake in the 2014 budget negotiations is to ensure that the Union does not find itself in an equally critical situation next spring”.

Lamassoure went on and explained that the 28 governments, by proposing such severe cuts on next year’s budget, “would force a choice between delivering on the political undertakings given at the European Council on youth employment, investing for the future, compensating victims of flooding in Germany and other countries and emergency aid to victims of the Syrian civil war and the Lampedusa refugees. Making such a choice would be immoral”.

By making a reference to moral issues, it is obvious that the European Parliament is ready to drag this confrontation to its limits. The Conciliation Committee of next Monday will decide over that. If there will be no conciliation on next year’s budget by 13 November, when the conciliation period expires, the Commission must submit a new draft budget for 2014. If the new budget is also rejected, the EU will be financed by the so-called provisional-twelfths arrangement.

This entails that budget appropriations per month will be limited to one twelfth of the amount in the 2013 budget or of the draft budget for 2014, whatever is the lower. This would be a rather embarrassing situation, indicative of a total inability of EU to decide on such a crucial matter as its own budget.

 

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