General Affairs Council
Ten ministers request macro-conditionality for all expenditure
By Gaspard Sebag | Monday 26 March 2012
Ten ministers have asked that the European Commission’s proposed macroeconomic conditionality for structural, rural development and fisheries funds apply to all EU expenditure in the 2014-2020 multiannual financial framework (MFF). Also during the General Affairs Council meeting, on 26 March, half a dozen net contributors requested that all the items of expenditure the EU executive placed outside the financial framework, including large-scale projects and reserves, be incorporated in the MFF ceilings. A blocking minority circulated a letter calling for the abolition of the European Globalisation Adjustment Fund (EGF).
If macroeconomic conditionality is to apply to structural, rural development and fisheries funds then it should apply across the board, to all elements of Union expenditure, argue the Italian, Polish, Portuguese, Hungarian, Romanian, Czech, Slovak, Slovenian, Latvian, Bulgarian and Maltese delegations. The Commission’s proposed macro-conditionality would mean that stakeholders would be subject to ex ante conditions - to be met even before any funds are distributed - and ex post conditions, which, if met, will reward states with additional funds. Budget Commissioner Janusz Lewandowski indicated that there are “legal controversies” about applying macroeconomic conditionality horizontally to all EU expenditure.
In order for member states to take responsibility for funding the “explosive costs” of ITER (International Thermonuclear Experimental Reactor) and GMES (Global Monitoring for Environment and Security), the EU executive decided to place these outside the next MFF. Nine member states oppose such a development, requesting that their funding should be included in the overall ceilings as a matter of transparency and budgetary discipline. Amongst these at least five - Germany, France, Italy, Sweden and the Netherlands - go even further and ask that all items, even those that are already outside the current MFF, such as the European Development Fund (EDF), be placed inside the financial framework.
This provoked the ire of Lewandowski. “I am not going to plan for floods in Europe,” he said, in reference to the EU Solidarity Fund that was created to respond to unforeseen natural disasters. Such expenditure, amongst other reserves, that is to be disbursed only in case of need, “cannot be in a decent way part of the European budget,” commented the budget commissioner.
A blocking minority - Sweden, Germany, the UK, the Czech Republic, Slovakia, the Netherlands, Estonia and Latvia - has risen up against the EGF, which the Commission has proposed to extend to farmers. These member states believe that tackling challenges related to globalisation should be done at national and not EU level.
Poland and Hungary will lead the charge against those member states that call for the Commission’s MFF proposal to be cut by at least €100 billion (see box). Polish European Affairs Minister Mikolaj Dowgielewicz said the EU executive’s proposal - €972 billion in payments and €1,025 billion in commitments - is the “absolute minimum”. On the other hand, Germany asked that, in view of probably “sluggish growth prospects,” the Commission review its growth assumptions and draw the consequences in terms of keeping the overall size of the next long-term budget under 1% of GNI (gross national income).
As in the past, several ministers called for further savings to be made in administrative expenditure. This got Administration Commissioner Maros Sefcovic worked up. He said that since the 2004 staff reform, the Commission has been unable to recruit people from “high-wage economies” as the starting salaries are not attractive enough. Finally, many other ministers favoured having, as in the current MFF, subheadings for Headings 1 (competitiveness) and 3 (security and citizenship) rather than the proposed sub-ceilings.
Why 100 billion euro cut?
To reach the figure of 100 billion euro in cuts, Germany, the United Kingdom, the Netherlands, Sweden and Austria took the level of payments for the 2012 EU budget as a starting point, multiplied it by seven and added inflation. The Commission, in order to get a freeze as requested by these member states, took the ceiling for 2013 and did the same multiplication.
The manoeuvre by five countries irritates Lewandowski, who believes this “convenient position” does not take into account the “true logic” of the financial framework, which sets ceilings that are “never attained” and not payments. “Annual budgets are clearly, by billions, lower than the ceilings,” said the commissioner. “It would be a real disaster to build the future of European projects basing on very low level of payments for 2012 producing cash-flow problems in the Commission already now,” added Lewandowski.