Monday 20. September 2021
#155 - December 2012


Moving towards a rigorous Multiannual Financial Framework


In normal times, the Conclusions of European Summits are spread out over a dozen pages or so. This time, just three paragraphs were needed to report the failure of acrimonious negotiations at the European Council over revenues from European taxpayers. Nevertheless, the future stages have been set out for finding an agreement following the 22 – 23 November Summit. We are moving towards a rigorous Multiannual Financial Framework.


First of all, these three paragraphs give a mandate to Herman Van Rompuy and José Manuel Barroso, the Presidents of the European Council and European Commission, respectively. They must now pursue consultations to find a consensus on the Multiannual Financial Framework that will lay down the major guidelines for the European budget for the period 2014-2020. Neither the Cyprus Presidency, which will finish at the end of this year, nor the Irish Presidency, starting in 1 January 2013, will any longer have responsibility for reconciling the positions between those countries that would like to cut down spending as far as possible and those that are following the line argued by the European Commission and Parliament for a more fleshed-out budget for Europe. Even Croatia as a future Member State is associated with the negotiations. Even though - ever since the entry into force of the Lisbon Treaty - the European Parliament has to give prior approval to the Multiannual Financial Framework – what really counts above all else is the consensus between the 27 Member States. In the end, the Council will – in conformity with Article 312 of the Treaty on the Functioning of the European Union – have to take a unanimous decision.


The Heads of State and Government then explain in their terse statement that the two previous days had not been in vain; they still harbour hopes of coming to an agreement at the beginning of next year, most likely during a new Summit in February. The major lines of compromise are quite discernable today. The basis for this will be the proposal put forward by Mr Van Rompuy at the end of the evening of 21 November. In this final draft, he gave new figures for Cohesion Policy (€320 billion instead of the €310 billion mentioned in his initial proposal of 13 November) and for the Common Agricultural Policy (€372 billion instead of €364 billion) while trimming off the amounts foreseen for major interconnection and infrastructure projects (€140 billion instead of €152 billion). Other reductions are suggested in programmes for internal security and external policy.


In order to reach a final consensus, it is highly likely that the global package for the next seven years will be reduced even further. Instead of the €1050 billion put forward in the Commission’s initial proposal of last July, and the €970 billion in the two proposals put forward by Mr Van Rompuy, the final figure will probably be nearer €950 billion. One of the adjustable cost centres could be the running costs of the European institutions. These costs are politically more difficult to defend than those for Cohesion or Agriculture, and so far they have not been touched by Mr Van Rompuy, who left them at the level proposed by the Commission (€63 billion). Thus the British Prime Minister David Cameron will be able to save face and give his necessary agreement. He had demanded a cutback of some €200 billion by harping on the contradiction between the necessarily tightened budgets at national level and a European financial framework that is expanding.


The thorny problem of revenues is still unresolved. Is the British rebate under threat? Will there be a generalised system for capping the payments of net contributors to the European budget? Will the revenues from the new tax on financial transactions (a proposal currently being pushed by 11 Member States) be fed into the European budget? Right now it is hard to be certain about this and also difficult to predict how the idea of a fiscal budget limited to the Eurozone only will develop. Therefore we will just have to hope that the efforts behind the scenes of Messrs Barroso and Van Rompuy will bear fruit in the next few weeks, because  “A European budget is important for the cohesion of the Union and for jobs and growth in all our countries.” That is what was said by the Heads of State and Government in their three-paragraph statement of 22 November.


Stefan Lunte



Translated from the original text in French

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