Monday

26th Jun 2017

EU averts crisis as budget talks end in success

  • Blair said it was "amazingly complex" to get the 25 to agree (Photo: European Community, 2005)

"We have an agreement on the financial perspectives", UK prime minister Tony Blair announced at 03:00 in Brussels on Saturday (17 December) after two days of nervous negotiations.

The deal averts the threat of deep political rifts within the EU as well as delays over further enlargement, with Macedonia on Saturday gaining EU candidate status.

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Under the compromise, EU spending in 2007-2013 will not rise above 1.045 percent (€862.4 billion) of the union's gross income; the UK will give €10.5 billion off its rebate; there is no commitment to reform either the UK rebate or the common agricultural policy (CAP) before 2013.

On top of this, Poland will be the largest beneficiary of EU cohesion spending, pocketing €59.7 billion, and the Netherlands got the €1 billion it wanted off its national contribution.

"Britain's strong relationship with the new countries has been safeguarded", Mr Blair said, stressing that the UK rebate "remains in full" as far as CAP spending in the old member states is concerned.

His old nemesis, French president Jacques Chirac, praised Mr Blair's "intelligence and courage", adding:

"We have a deal, a good deal for Europe, which provides sufficient means to finance its ambitions for the European Community and for enlargement."

European Commission president Jose Manuel Barroso indicated the compromise was "not everything the commission wanted", but that "Europe avoided paralysis."

Poland ecstatic

Polish prime minister Kazimierz Marcinkiewicz punched his hand in the air and said "Yes! Yes! Yes!" in reaction to the agreement.

"It is for this kind of compromise that we came here", he said, adding "We will use it to chase the richest countries in Europe."

The Polish leader revealed that after all 25 EU members had signed up to the budget deal, German chancellor Angela Merkel took €100 million of aid designated for German regions and gave it to Poland.

"This is a beautiful, excellent gesture, hard to measure in zloty or euro because it is a gesture of solidarity", he indicated.

He explained that the key to the agreement was a spending compromise between the UK, France and Germany.

He also singled out the "good ghost" of Luxembourg prime minister Jean Claude Juncker, who helped keep relations friendly even as Poland twice threatened to walk out of the talks on Friday.

Macedonia on its way into EU

The budget deal allowed EU leaders to approve official EU candidate status for the Former Yugoslav Republic of Macedonia, which France had threatened to veto in the event of no budget deal.

EU leaders recognized Macedonia's "substantial progress" in securing minority rights and implementing its Stabilisation and Association Agreement with Brussels.

But their formal conclusions made clear Skopje's new status did not automatically mean the opening of accession talks, with member states referring to the union's own "absorption capacity" as one of the benchmarks for taking further steps.

Macedonia now joins Croatia and Turkey, which became EU candidates in October.

Meanwhile, a tired set of 25 EU leaders climbed back into their limousines and headed home to begin the process of selling the new finance deal across Europe.

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.

Row between EU ministers halts e-book tax rate

A bill to reduce VAT rates on e-books and e-publications has become the latest victim of a row between the Czech Republic and its partners over its own plan to collect VAT.

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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