Thursday

28th Mar 2024

Clash looms over future EU funding

Tough talks are expected when the Commission and EU states meet for the first time this weekend to discuss the EU’s budget until the middle of the next decade.

The meeting will be the first face-to-face discussion between the two on how to fund the EU from 2007 to 2013

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Commission President Romano Prodi and his team will put the case for an increase in the EU budget, but can expect short shrift from some member states - including the 'big three'.

Last December, the leaders of the UK, France, Germany, the Netherlands, Sweden and Austria signed a joint letter to Mr Prodi calling for the 2007-2013 EU budget to be capped.

They said that contributions should be no higher than one percent of gross national income (GNI), significantly lower than the current ceiling of 1.24 percent.

But the Commission has ignored the plea and published proposals for large increases over the seven years.

Under the Commission’s plans, member states would contribute just over 900 billion euro over the spending period - known in Brussels jargon as the ‘financial perspective’.

Brussels argues that more cash is necessary if the EU wants to be a major player on the world stage, both in terms of foreign policy clout and in meeting its objective to become "the most competitive economy in the world by 2010".

The Commission also believes that the eve of enlargement is not the time to begin cutting EU funds.

Tit-for-tat

Since the proposals were published, a series of tit-for-tat battles has taken place in the media.

German finance minister Hans Eichel and his British counterpart Gordon Brown have both said that member states will stick to their guns. Swedish finance minister Bosse Ringholm described the Commission's plans as "totally unacceptable" and said in an interview with this news-site that some of the new member states were likely to join the six net contributors in calling for a cap in the budget.

But the Commission is not taking it lying down.

Mr Prodi will be flanked by budget commissioner Michaele Schreyer, economics commissioner Pedro Solbes and internal market commissioner Frits Bolkestein.

In early March, Ms Schreyer called the position of the member states "completely untenable" and saying that a reduction in spending would lead to less European integration.

So the informal gathering will give the two opposing camps the first opportunity to discuss the issue head-to-head. But there will be no legally binding conclusions, since the meeting is informal.

However, this is being billed in Brussels as the first battle in what promises to be a lengthy war.

The last time the EU budget was debated - in 1999 - agreement was reached in the early hours of the morning after acrimonious debate.

The Commission's position is undoubtedly weaker after the departure of various commissioners to domestic politics. For this reason, member states may wait until the next Commission is installed before beginning serious talks.

Horse-trading

Ministers will also haggle over who will be the new head of the International Monetary Fund (IMF) after the surprise resignation of current managing director Horst Köhler.

The job is traditionally given to a European but member states are currently locked in protracted horse-trading to decide who will clinch the post.

The only candidate officially proposed is outgoing Spanish finance minister Rodrigo Rato, who is supported by smaller member states.

But France is pushing its own candidate, Jean Lemierre, currently head of the European Bank of Reconstruction and Development. Mr Lemierre is also said to enjoy the support of Germany.

And last week, Italy announced that competition commissioner Mario Monti would also be entering the battle.

All candidates will be presented to finance ministers and member states will offer opinions. However, it is unclear whether a final decision will be taken at this meeting - the final decision rests with the IMF itself.

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