Monday

26th Jun 2017

Sweden emerges as top EU budget hawk

Sweden has taken over from the UK as the biggest EU budget hawk after calling for cuts of over €150 billion.

Its EU affairs minister, Birgitta Ohlsson, on Tuesday (29 October) lambasted the Cypriot presidency for proposing cuts of €50 billion on a European Commission plan to spend €1,033 billion in 2014 to 2020.

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  • Viking-type boat in Stockholm - the Swedes dished out the harshest criticism on the Cypriot plan (Photo: panoramas)

She said the cuts should be "three or four times as much" and that "no deal will be possible on the basis" of the Cypriot blueprint when EU leaders meet in Brussels three weeks from now.

She also called the Cypriot plan "a budget for the 1950s" because it proposed big savings on research and cross-border infrastructure instead of lowering farm aid.

Foreign minister Carl Bildt and Prime Minister Fredrik Reinfeldt published similar views.

"It was a distinctly backward-looking EU budget proposal ... Are they aware of a changing world out there?" Bildt said on Twitter. Cyprus' figures are "unrealistic. They have to be lowered," Reinfeldt told the TT news agency.

The other two hawks - the Netherlands and the UK - were less audible.

A Dutch spokesman blamed the silence on the formation of a new coalition government in The Hague.

But he said the new alliance makes no difference to a previous threat to veto cuts below €100 billion.

The UK kept quiet ahead of a parliamentary debate on the EU budget on Wednesday.

British leader David Cameron was the first to threaten a veto earlier this month. But EU sources say developments last week have mellowed the British mood.

The commission in an internal paper circulated last Wednesday had called for an end to the UK's automatic rebate - a 30-year-old deal which sees it get back over €3 billion a year. "The unique treatment of the UK in comparison with other net contributor member states seems no longer warranted," it said, according to the FT.

The idea got little support from member states, creating confidence in London that its rebate is not at risk, however.

"The UK has been more positive than Cameron was in its bilateral contacts with other member states in the past few days. We saw a change in their mood after it became clear that the rebate is a non-issue," one EU source said.

"It was no surprise to us that the commission tried this on at this stage in the negotiations. But we made clear last week that our rebate is fully justified," a British contact said.

The other big players - France and Germany - were cautiously positive on the Cypriot ideas.

France is happy that farm aid is more or less unchanged.

A German contact told this website: "They [Cyprus] have taken a step in the right direction by starting to cut the commission proposal. But we are not there yet. We feel there is still space left for more reductions."

Spain was also happy that aid-cut-off lines for poor regions which no longer qualify for "cohesion" assistance in technical terms and for crisis-hit EU countries were not pulled down too low.

"The safety net proposals are not that bad," a Spanish diplomat said. Cyprus' farm aid numbers "could be worse," the contact added.

Despite the friendly remarks, there is no shortage of malcontents in Brussels, however.

The commission and the European Parliament blasted Cyprus for tabling any cuts whatsoever.

For its part, Poland echoed Sweden in saying there should be more money for economic-growth-related projects. But it is diametrically opposed to Sweden on budget reductions.

"Our arguments were not listened to. The budget is moving away from a pro-investment model and we feel it should not be reduced," a Polish diplomat told this website.

Internal talks between EU countries will resume in Brussels on Wednesday.

But one EU contact was "pessimistic" they will lead to a deal at the summit on 22 November.

"In a way, the talks have been going on for over a year. But these were not real negotiations - it was just countries setting out shopping lists of demands. Some blood will have to be spilt before we can move forward and I don't think there is enough time to do this before the Council," the source said.

New EU budget proposal cuts across red lines

The Cypriot presidency has proposed cutting €50 billion off EU spending plans for 2014 to 2020 - a number that could trigger national vetoes and strikes by EU staff.

Agenda

EU budget, Merkel on agenda this WEEK

Negotiations on the EU's next seven-year budget start on Monday, with sources predicting a deal on €200 billion cuts.

EU approves rescue of Italian banks

The European Commission gave the green light to a €17-billion plan by the Italian government to save Banca Popolare di Vicenza and Veneto Banca.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

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