Those newspapers that had their own correspondents at the European Council have been promoting euphoria a tad too much.
They seem to gloss over Malta losing as much as 20 per cent of the previous EU funding, from €855 million, originally, to €480 million and now, according to Van Rompuy’s Plan B, pumped up to €680 million mainly because Malta has graduated from the poor set of countries to a less poor group (mostly because the new entrants, Bulgaria and Romania, put the average down for Malta).
And now they seem to take it for granted that Malta will get €200 million more than was first offered, which brings the total they say will come to Malta up to €680 million.
So on the one hand we had the summit breaking up in disarray without any conclusion reached, but the Maltese press, encouraged no doubt by the ever-optimistic administration, saying there was an “outcome” and Malta stands to get, or has been “offered”, €680 million.
To say so is to totally misrepresent the facts and the underlying situation so that, when the January summit hopefully concludes the negotiations, we may find ourselves with egg on our faces.
First of all, the background.
The actual summit started on Thursday at 11pm after a long session of “confessionals” – bilateral meetings with Council President Herman Van Rompuy and Commission President José Manuel Barroso.
Following these meetings, Van Rompuy made changes to his proposal for the Union’s budget for 2014-2020. While keeping the overall budget figure roughly at the same level of €973 billion, he proposed an additional €8 billion for agriculture and €10 billion for cohesion.
On the other side, the new proposal is slashing €13 billion from the “Competitiveness for growth and jobs” budget category, which includes the Connecting Europe facility; €1.6 billion for justice and security; and €5 billion for external policies. In the initial proposal, this category was €152.6 billion.
“The proposal I put on the table is a moderation budget. The times call for it. Doing more with less money involves political choices. This is painful, even when cuts are evenly spread,” Van Rompuy told leaders.
But the talks broke down on Friday afternoon after Van Rompuy concluded that he could not bridge a gap as wide as €30 billion between the spending demands of France, Spain and Italy and the relative austerity ordered by the UK, Netherlands, Germany and others.
The bloc’s new member states from Central and Eastern Europe, led by Poland, had demanded a bigger budget, though they were relegated to the margins as the biggest paymasters confronted each other.
Van Rompuy threw in the towel after an alliance of the EU’s richest countries, led by Britain and Germany, declined to accept a €971 billion budget for 2014-2020.
Van Rompuy had informally proposed lowering his €971 billion budget to €940 billion according to the “payment ceiling” which covers the money the EU would distribute rather than the higher “commitment ceiling”. This is described by Britain as a credit card limit.
The British prime minister argued for a further cut of €50 billion in the proposed €940 billion budget, taking it closer to the original British demand of a €885.6 billion budget. The Dutch demanded an even bigger cut of €100 billion. German Chancellor Angela Merkel was keen to see further cuts on the Van Rompuy proposal, though she believed that the €50 billion suggested by Britain went too far.
David Cameron dismissed the latest draft budget tabled the night before by Van Rompuy as “tinkering with figures” instead of making real spending cuts. “We need a real cut, that’s what’s happening at home, that’s what needs to happen here,” he said.
This is the link to Van Rompuy’s second draft − http://static.euractiv.com/sites/all/euractiv/files/MFF%20Van%20Rompuy%20Paper%20II%20Draft.pdf
The reference to Malta (and Cyprus) comes at point 54: “Malta and Cyprus shall receive, after application of point 47, an additional envelope of €200 million and €150 million respectively under the ‘Investment and Growth goal’ and distributed as follows: one third for the Cohesion Fund and two-thirds for the Structural Funds.”
Dr Gonzi was reported to have explained the €200 addition came after Malta’s argument that it needed a ‘special transition period’ from Objective One to Objective Two (from the poorer group of member states to the less poor) was accepted and so was accorded €122 million, with another €78 million due to Malta’s particular status of an island region cut off from mainland Europe.
Dr Gonzi was also quoted as saying he is still not satisfied and will keep working to improve what has already been offered. Like Oliver Twist, he “wants some more”.
But looking again at what happened in these two days in Brussels, it would seem that not only we may not get ‘some more’ but we may also see these additional €200 million or some or more of them vanish into thin air.
No other member state has had its allocation pumped up by so much in Van Rompuy’s Plan B.
Other countries frown at the Van Rompuy proposals. Estonia, Latvia and Lithuania, which were formerly part of the Soviet Union and need to build energy connections with the EU, will without doubt be affected by cuts to the Connecting Europe Facility.
Austria and Denmark, which have also asked for a rebate, are unhappy with the proposals. The Van Rompuy paper foresees annual “corrections” in favour of Germany (€2.8 billion), The Netherlands (€1.15 billion) and Sweden (€325 million).
Italy, a country that contributes more to the EU budget than it gets in return, is unhappy with the current proposals. Before the summit, an Italian minister threatened a veto, and in Brussels Prime Minister Mario Monti said that his country would not “accept the unacceptable”.
Poland and the other poorer East European countries fear further cuts in the budget in the course of the negotiations.
Also, Poland rejects the capping on spending on cohesion funding at 2.35 per cent as proposed by Van Rompuy. Poland insists a return to the former figure of 2.4 per cent, as the difference amounts to less revenue for the country of €1.5 billion.
Other Eastern member states were not happy. According to one participant at the debates, Romanian President Traian Basescu lashed out at the proposal and demanded more for cohesion and agriculture aid.
Romania however has used less than 10 per cent of the €20 billion allocated for 2007-2013 and the EU commission has frozen all the funds for this year due to irregularities in the public tenders. The non-used money flows back to member states.
A clearly frustrated Cameron still said the budget deal it offered was “just not good enough”, and insisted there should be cuts to the perks, pay and pensions of “eurocrats”.
“Brussels continues to exist as if it is in a parallel universe,” Cameron said.
“Last night the Commission didn’t offer a single euro in savings, not one euro, and I just don’t think that is good enough.”
There was also the political angle to consider. The British prime minister joined forces with Angela Merkel, the German chancellor, Mark Rutte, the Dutch prime minister, and Fredrik Reinfeldt, the Swedish prime minister, to say the proposed budget was too large.
According to The Guardian, Merkel was understood to have been furious with Van Rompuy and José Manuel Barroso for an attempt to try and isolate Britain.
Speaking after the summit broke up the British prime minister said: “It has been very heartening that, as well as myself arguing for significant reductions and being on the side of taxpayers the Swedes and the Dutch have made very strong representations too.
“I think attempts there might have been to try and – ‘well, let’s just put the British in a box over there and try and do a deal without them’ – well that didn’t work.
“There were other countries I have worked with that together were making sure we were all standing up together for taxpayers and to make sure we have a fair outcome to this budget when we are cutting our budgets at home.”
There is still time to stitch up an agreement. The seven-year budget in 1999 was agreed after poisonous debates only nine months before it should have started and in 2005, it was sealed 12 months before.
Finally, Liberal leader and former Belgian Prime Minister Guy Verhofstadt said the whole summit looked like a “Turkish bazaar” where everyone needs to show they fought for a good deal, even though the sum is tiny compared to what national budgets are.
The one-trillion-euro budget for 2014-2020 is only one per cent of the EU’s total gross domestic product, compared to 24 per cent of the federal budget in the US, Verhofstadt stressed.
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