The negotiations about the budget: A happy ending tragedy?

By Chloé Fabre | 4 February 2013

To quote this document: Chloé Fabre, “The negotiations about the budget: A happy ending tragedy?”, Nouvelle Europe [en ligne], Monday 4 February 2013, http://www.nouvelle-europe.eu/node/1629, displayed on 06 December 2022

“If you do not believe in miracles, you should not work in European affairs” said a German official about the budget negotiations. In fact, these negotiations highlight the lack of solidarity among member states in a time of crisis, and give an example of European disintegration.

The heads of state and government of the 27 member states met on 22 and 23 November to discuss at the highest level the multi-annual financial framework (MFF) for the next 7 years. But not much was achieved in this summit. It was mainly a moment for each national leader to make a good impression on the public opinion in his own national framework.

State of the debate: net contributors against net beneficiaries?

The Commission wrote a proposal to increase the budget. As the EU budget cannot go over 1,23% of the European GDP, the increase was of some decimals. The Commission’s proposal would create a budget of almost € 1,050 billion.

Many states were reluctant to let this small increase take place. Indeed, the EU is financed mainly by the contributions of member states. They represent around 75% of the EU income (around € 90 billion per year), according to Touteleurope.eu. Reluctant states were, not surprisingly, those who contribute a lot to the EU budget. The UK was part of this group of “better spending” with other net contributors (countries which pay more than what they receive): Germany, the Netherlands, Denmark, Finland, France, Italy, Austria and Sweden.

On the other side of the table, countries that benefit a lot from EU budget, especially through the cohesion and structural funds, gathered into a group called “the Friends of cohesion”. Indeed, the project of the Commission favoured the spending of the funds to support growth and development. This group includes mainly Central and Eastern European countries (Czech Republic, Slovakia, Poland, Hungary, Slovenia, Estonia, Latvia, Lithuania, Romania and Bulgaria), but also Mediterranean states (Greece, Spain and Portugal) as well as Croatia. They met several times to prepare their strategy ahead of the summit. If they were the more numerous, their voice was not strong enough, compared to the “big” countries: in an intergovernmental game, obviously, those who give more money have a stronger voice.

National interests in an intergovernmental negotiation

The debate about the European budget showed, as usual, battles between member states to put forward their own interest with regard to the public opinion back in their country. Indeed, the system for taking decision encourages national interest. As Lamassoure, president of the budget commission in the European Parliament, put it in an interview for Le Taurillon, “When national budgets are completely intertwined with the European one, each Budget minister, Prime Minister or President comes to Brussels to negotiate, thinking to defend his/her national budget”.

In a time of crisis, the idea of cutting European spending, as each state does, sounds rational. And, indeed, Cameron’s argument about the level of wages of EU civil servants had a very strong effect on citizens, who are asked to pay more taxes and to see cuts in most  of the welfare state in order to reduce the national debt.

Solidarity to reach the EU2020 goals

But in this debate, very few voices rose to explain how the European money is spent. The 2014 – 2020 budget has to support the EU2020 strategy, that aims at developing a smart, inclusive and green growth in the EU. That is to say, to fight unemployment, to develop innovation and competitiveness, and to strengthen the green economy in the EU. How would the budget do that?  By financing programmes to help the development of infrastructures and businesses  that should train people and provide them with jobs, for instance to reinforce research about green energies. In 2011, the spending for regional development, growth and employment represented more than 35% of the budget, those for agricultural and fisheries policies including ecological concerns represented around 40%, and spending for competitiveness (research and innovation, education, training) were about 13% of the budget.

This money spent at a European level tends to be more efficient than the money spent at the national one. Indeed, when British tax payers give a pound to the European budget, a large part of it is not spent in the UK but mainly in the Eastern part of Europe. By strengthening Central and Eastern Europeans economies, we enlarge the market, that is to say there will be more consumers able to buy goods from the EU. Therefore, if rich Western countries pay more than they receive on the first round, financing the EU budget also strengthens their own economy on a second round.

The European budget is also the paramount figure of European solidarity. And heads of state and of government who are about to meet up at the Council forgot about that in their public discourse.

Play again the drama

The budget negotiations have been difficult. The presidency of the Council, after the “confessional” session, actually changed its proposal in order to reach an agreement successfully; Cameron opposed a veto threat early in the process; France changed its alliances; Germany balanced in-between; the Parliament was not heard… Yes, indeed, but budget negotiations have always been the battle ground for states frustrations. This time too, the Council finally reached an agreement at the last minute.

The budget was put in a financial framework of seven years precisely to limit the time spent in those negotiations each year; but then every seventh year, the bargain occurs again.

We could say that it is part of the “dramatization” of the European play: everybody plays his/her role as written in the script, but the ending is the same, a mitigate compromise. At least, the performance was good.

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