Budget 2012 - member states versus the EU
by Sigrid Melchior
11 May 2011
Everything points to a big clash over the 2012 European Union budget, with austerity-struck member states calling for a freeze and Eurosceptic movements on the rise, writes Sigrid Melchior.
Negotiations between member states kick off next month, coinciding with the European Commission's proposal for a long term budget - an issue that is politically even trickier. When EU Budget Commissioner Janusz Lewandowski announced the commission's proposal for the 2012 budget, last month, including a rise in spending of 4.9 per cent - he admitted that the negotiations with the national governments and the European Parliament, both of which have to approve, would probably get tough.
Germany, France and the UK have adopted a not-a-penny-more stance. In a joint letter, at a summit last December - British Prime Minister David Cameron and his French, German, Dutch and Finnish counterparts asked that the "action taken in 2011 to curb annual growth in European payment appropriations should be stepped up progressively over the remaining years of this financial perspective". In other words, the 2012 budget should not increase more than in the year before.
Last year, the commission proposed a 5.9 per cent increase for the 2011 budget. But, after British resistance, it eventually went up by just 2.9 per cent. This year's proposed rise is less flexible, according to the commission. Approaching the end of the financial perspective - or the seven year budget cycle - the commission has a legal obligation to hand out all the money that it committed to in previous years.
"You can compare it with building a new house - the first year you spend a bit of money on the architect, but after a few years you will have to pay the builders," says Patrizio Fiorilli, spokesman for the budget commissioner, adding that some of the cuts in the 2011 budget actually meant postponing expenses to 2012.
Currently, some 80 per cent of all EU funding goes towards agriculture and regional spending – money that is tied-up, according to the commission. Add to that the salaries of the newly-hired staff for the European External Action Service, already agreed last year, and only about a tenth of the budget can be seen as legal prey for budget-slashes.
Even so, UK officials disagree with this. They say it is possible to honour prior commitments without such a big budget hike. Austerity measures in Britain and many member states continue to produce siren calls for the EU budget to take a hit as well. "Because of the economic climate, this is by far the most difficult budget negotiation" says Fiorilli. "Member states often want to cut, but ideally in someone else's garden."
Growing public opposition to the EU bail-outs for indebted eurozone countries also plays a part in hardening attitudes. Meanwhile, Eurosceptic and nationalist movements are on the rise in several member states. In Finland, populist party the True Finns got a fifth of the vote in the recent elections.
As with other net financial contributors to the EU, there has been occasional criticism in Finland over how much it pays to the union coffers. But "most people thought the levels were acceptable and that we should contribute to the common good", admits Juha Jokela, Finnish Institute of International Affairs programme director. "But now, with the bailouts, people feel it is all too much. They are worried about how the EU economy is developing and what the implications for the Finns are".
The True Finns have so far focussed their criticism on the Portuguese bailout, the EU stability mechanism and a possible restructuring of Greek debt. Party leader of the True Finns Timo Soini has, though, also criticised the British rebate - saying it would have to go. The split between the richer north of Europe and the poorer south and east - or between net contributors and net beneficiaries - is not clear-cut. France and Germany, for example, want a budget freeze while maintaining the status quo on agriculture, which accounts for 45 per cent of EU spending.
Both the regional and the agricultural policy are coming to an end in 2013, and new policies are being defined - while the next financial framework for 2014-2020, will soon be debated. That sets the stage for major re-negotiations and position changes. It might be sometime yet before a consensus is reached - but, as we all know, that is par for the course when it comes to European affairs.
Negotiations between member states kick off next month, coinciding with the European Commission's proposal for a long term budget - an issue that is politically even trickier. When EU Budget Commissioner Janusz Lewandowski announced the commission's proposal for the 2012 budget, last month, including a rise in spending of 4.9 per cent - he admitted that the negotiations with the national governments and the European Parliament, both of which have to approve, would probably get tough.
Germany, France and the UK have adopted a not-a-penny-more stance. In a joint letter, at a summit last December - British Prime Minister David Cameron and his French, German, Dutch and Finnish counterparts asked that the "action taken in 2011 to curb annual growth in European payment appropriations should be stepped up progressively over the remaining years of this financial perspective". In other words, the 2012 budget should not increase more than in the year before.
Last year, the commission proposed a 5.9 per cent increase for the 2011 budget. But, after British resistance, it eventually went up by just 2.9 per cent. This year's proposed rise is less flexible, according to the commission. Approaching the end of the financial perspective - or the seven year budget cycle - the commission has a legal obligation to hand out all the money that it committed to in previous years.
"You can compare it with building a new house - the first year you spend a bit of money on the architect, but after a few years you will have to pay the builders," says Patrizio Fiorilli, spokesman for the budget commissioner, adding that some of the cuts in the 2011 budget actually meant postponing expenses to 2012.
Currently, some 80 per cent of all EU funding goes towards agriculture and regional spending – money that is tied-up, according to the commission. Add to that the salaries of the newly-hired staff for the European External Action Service, already agreed last year, and only about a tenth of the budget can be seen as legal prey for budget-slashes.
Even so, UK officials disagree with this. They say it is possible to honour prior commitments without such a big budget hike. Austerity measures in Britain and many member states continue to produce siren calls for the EU budget to take a hit as well. "Because of the economic climate, this is by far the most difficult budget negotiation" says Fiorilli. "Member states often want to cut, but ideally in someone else's garden."
Growing public opposition to the EU bail-outs for indebted eurozone countries also plays a part in hardening attitudes. Meanwhile, Eurosceptic and nationalist movements are on the rise in several member states. In Finland, populist party the True Finns got a fifth of the vote in the recent elections.
As with other net financial contributors to the EU, there has been occasional criticism in Finland over how much it pays to the union coffers. But "most people thought the levels were acceptable and that we should contribute to the common good", admits Juha Jokela, Finnish Institute of International Affairs programme director. "But now, with the bailouts, people feel it is all too much. They are worried about how the EU economy is developing and what the implications for the Finns are".
The True Finns have so far focussed their criticism on the Portuguese bailout, the EU stability mechanism and a possible restructuring of Greek debt. Party leader of the True Finns Timo Soini has, though, also criticised the British rebate - saying it would have to go. The split between the richer north of Europe and the poorer south and east - or between net contributors and net beneficiaries - is not clear-cut. France and Germany, for example, want a budget freeze while maintaining the status quo on agriculture, which accounts for 45 per cent of EU spending.
Both the regional and the agricultural policy are coming to an end in 2013, and new policies are being defined - while the next financial framework for 2014-2020, will soon be debated. That sets the stage for major re-negotiations and position changes. It might be sometime yet before a consensus is reached - but, as we all know, that is par for the course when it comes to European affairs.
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