Multiannual financial framework
EP reminds Council it has veto power
By Gaspard Sebag in Strasbourg | Tuesday 23 October 2012
The drum roll has begun. The European Parliament is keen to show that it is ready to go to war over the 2014-2020 multiannual financial framework (MFF) and that, as every member state, it also has an A-bomb in case it is not satisfied: a veto. Under the current circumstances, the EPP’s budget expert, Alain Lamassoure (France), is dubious about an agreement between EU leaders in November, as hoped for by European Council President Herman Van Rompuy, let alone one with Parliament.
British Premier David Cameron said, on the margins of the 18-19 October EU summit, that he would veto the MFF if he did not consider it to be in the interest of his country’s taxpayers. “If Cameron does it, we can do it as well,” warns S&D leader Hannes Swoboda (Austria). According to the treaties, the EP has a right of consent over the MFF regulation, ie it can say ‘yes’ or ‘no’ to the deal reached unanimously amongst EU leaders. That is in effect a veto right, yet not one to modify the substance of the agreement, simply to influence it by taking a public stance on the EU’s long-term budget before a deal is sealed. That is what Parliament is doing now via an interim report drafted by Reimer Böge (EPP, Germany) and Ivailo Kalfin (S&D, Bulgaria) and voted by plenary on 23 October.
In both rapporteurs’ opinion, the Commission’s MFF proposal
(1) is not sufficient to finance all priorities EU has set itself. The Council is therefore warned by deputies against making horizontal cuts. MEPs naturally defend the two largest spending blocks: cohesion policy and Common Agricultural Policy (CAP), accounting for around 80% of total spending.
Parliamentarians also request a “significant increase - notably through the Connecting Europe Facility - in the funding available for the Union programmes in the fields of competiveness, SMEs and infrastructures,” as well as for EU research and innovation funding. As regards foreign affairs expenditure, MEPs say the Commission’s proposal is the “bare minimum”.
The report reiterates Parliament’s request for a reform of the revenue side to move away from a system where the bulk (85%) of the EU budget is funded via national contributions. They believe this is a condition to depart from the ‘juste retour’ principle, whereby member states only view expenditure at European level in terms of its net return rather than its positive spill-over effects. Thus deputies reaffirm that the EP is “not prepared to give its consent to the next MFF regulation without a political agreement on reform of the own-resources system”. Parliamentarians consider that the share of national contributions should go down to a maximum of 40% by 2020.
All of these demands put Parliament at odds with the member states. In terms of size, the Cyprus Presidency, having gauged member states, considers it “inevitable” that the Commission’s proposal, including all elements inside and outside the MFF, will have to be adjusted downwards. The revenue side of the negotiations has not progressed one inch in Council but according to several sources it will be impossible to scrap all rebates, especially the British and German ones.
Prospects of a deal being reached before the end of the year, as wished for by EU leaders, are therefore not encouraging. “The way things stand, we are heading toward a deadlock,” says Daniel Cohn-Bendit (France), co-chair of the Greens-EFA group. He does not see either the UK - understood to be holding the most austere stance - or the EP change their positions.
That does not worry budget veteran Böge, who insists that the quality of the MFF deal is more important than the speed at which it is reached. “We need to come up with a result but not at any cost,” he said in plenary before the vote on his report. The Commission, on the other hand, points out that the late agreement last time round in 2006 caused a delay in the launch of multiannual programmes, which now means a piling up of bills at the end of the MFF (see separate article on EU budget).
The reason Parliament feels it is in a strong position is that it considers that blocking an unsatisfactory agreement over the next long-term budget would be rather favourable, at least in 2014. In case no MFF regulation is in place at the beginning of 2014, the ceilings of the previous year are rolled over and adjusted according to a 2% fixed deflator until a new act is adopted.
While the German MEP’s determination to block a sub-par deal is not in question, the same cannot be said of all his colleagues, according to some sources, especially due to the way electoral lists are drawn up, making certain national delegations particularly prone to lobbying from the capitals, such as the Spanish EPP delegation. Lamassoure has faith in his colleagues’ independence.
Another danger exists. Rolling over the current ceilings does not necessarily mean rolling over payments. Indeed, bar agricultural and administrative expenditure and committed expenditure, such as cohesion policy spending that can be reimbursed two years after it is committed, all other spending grinds to a halt if there is no agreement on sector-specific legislation. Foreign affairs and research expenditure would therefore risk being the most affected if there is no deal.
In case the plenary chickens out and agrees to an ‘a minima’ long-term budget deal, Böge insisted on inserting a safety net in his report. The co-rapporteur requests that the Council agree to a mid-term revision before 2018, in hope of better times. “It is simply plain wrong to think that we can be out of the woods in two-three years,” says a source close to the MFF negotiations, pointing out that low growth will not allow the reduction of government debt. Consolidation efforts will have to continue for several years, adds the source.
Present in plenary, Cyprus’ Deputy Minister for European Affairs, Andreas Mavroyiannis, said that a new version of the Presidency’s MFF ‘negotiating box’ will be ready by the end of the week. It is expected to contain figures - so far missing - and should be the basis for discussion at the 22-23 November EU summit.(1) Revised July numbers represent an overall ceiling of €1,033 billion in 2011 prices (1.08% of GNI) in commitments for the 2012-2014 period. In payments, the amended proposal amounts to €988 billion.