Saturday

28th May 2016

Commission: €11bn extra or we could halt EU payments

  • EU cohesion payments could be halted without new funds (Photo: ec.europa.eu)

The EU would have to halt multi-billion-euro payments to the bloc's poorest regions without an extra €11 billion for the EU budget, MEPs were told Monday (15 April).

Speaking at a hearing of the European Parliament's budget committee in Strasbourg, Polish budgets commissioner Janusz Lewandowski, admitted that the the commission had "cashflow problems" and would struggle to make cohesion payments in the second half of 2013.

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According to figures distributed to MEPs in Strasbourg, the commission needs an extra €11.2 billion to cover payments for projects across the EU in 2013.

Of this, €9 billion is needed to cover EU cohesion policy, which covers infrastructure projects in the poorest regions of Europe, with a further €2.2 billion needed to make agricultural payments and EU foreign policy. A total of €2.6 billion is needed to cover outstanding bills from 2012 and previous years.

Alain Lamassoure, the French centre-right chairman of the committee, said that the EU would have to stop or freeze payments planned for the second half of 2013 if no deal could be reached.

Commenting that many EU projects were organised on a quarterly basis he argued that measures could be taken to halt payments between June and the end of October.

MEPs also expressed doubts that the €11.2 billion would be enough.

Ivailo Kalfin, a centre-left MEP and member of the European Parliament's negotiating team on the budget, said that "we all know that the €11 billion will not be enough," with Dutch liberal Jan Mulder among other MEPs contending that a €16 billion shortfall is more realistic.

However, UK conservative MEP Marta Andreasen accused the Commission of lacking "credibility". "What is the value of negotiating an annual budget if three months afterwards you ask for more money," she asked.

The Commission request came just over three months after the 2013 EU budget was finally agreed in December following a long-running stand-off between MEPs and ministers. The budget is worth €132.8 billion, a 2.4 per cent increase on the 2011 settlement but around €5 billon less than the figure requested by MEPs and the commission.

However, MEPs claimed that they only approved the budget after signing a declaration requiring governments to stump up extra funds if the Commission ran out of money.

Last October it was revealed that the EU executive could no longer pay its bills for the Erasmus student-exchange scheme or the European Social Fund.

Although most MEPs supported the commission's stance, EU governments are reluctant to release any more cash to the EU executive.

In a letter to national MPs earlier this month, Jeroen Dijsselbloem, the Dutch finance minister and chairman of the Eurogroup, called on the commission to cover the shortfall by making savings.

He also accused the EU executive of having "made no effort whatsoever to find the space (for savings) elsewhere in the budget."

Dijsselbloem also raised the possibility of forming a blocking minority with other governments in a bid to prevent the funds being released.

Meanwhile, UK Treasury minister Greg Clark condemned the proposal as "extraordinary" and "unacceptable at a time when most EU member states are taking difficult decisions to reduce public spending."

Finance ministers baulk at tax-avoidance rules

Member states will discuss again in June a proposed directive to outlaw practices used by large companies to avoid paying taxes. Meanwhile, the European Parliament makes progress on its probe of Panama Papers.

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