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23rd Jan 2021

Internal wrangles risk leaving EU without 2011 budget

  • A battle between the member states and the parliament is brewing (Photo: European Commission)

Tough negotiations between EU institutions could leave the bloc without a formal budget next year, as newly empowered MEPs seek to use their ability to sanction the annual budget in order to extract their more longer-term wishes from member states.

This was the concern expressed by one senior Belgian official at an off-the-record briefing on Monday (28 June), as the outgoing government prepares to take over the EU's rotating presidency this week at an interesting juncture regarding future EU funding.

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"There is a real possibility of not agreeing a 2011 budget," said the official, who has conducted extensive behind-the-scenes talks with members of the EU legislature. "As the first budget to be agreed under the Lisbon Treaty, it would not set a good precedent."

The new EU rulebook, which came into force last December, hands MEPs a greater say over how the bloc spends its money.

The Belgian official said he feared euro deputies would use the 2011 budget discussions to show that parliament meant business ahead of the fast-approaching debate on the EU's next long-term spending programme (2014-2020).

"The 2011 debate is a strategic debate," said the official. "I hear MEPs want to have a greater say over the longer-term issues of the EU's 2020 growth strategy and the matter of budgetary 'own resources'."

But there is also room for a potential argument due to shorter-term fiscal constraints.

Under the standard institutional game played out between EU institutions, the commission proposes a draft annual budget in the spring, which member states then generally seek to reduce and parliament usually tries to increase.

In April the commission proposed a €130 billion recession-busting budget for 2011, measured in forecast expenditure, an increase of 5.9 percent on this year's budget.

While MEPs are likely to back the increase due to the heavier workload under the Lisbon Treaty, member states are slashing their domestic spending plans, giving in to pressure from financial markets by imposing swingeing austerity measures.

Should the parliament and member states fail to reach an agreement by the end of this year, the EU's 2010 budget will simply be rolled out again as negotiations continue, but "cohesion payments and the European External Action Service could be affected," said the Belgian source.

Own resources

In September, the European Commission will come forward with an initial paper on the next multi-annual financial perspectives, plunging the Belgians into the heart of a wider debate, which will ultimately dictate much of the EU's future actions.

While most of the tough negotiations will be carried out next year, Belgian authorities have indicated they will attempt to hold a preliminary meeting between member states, the parliament and commission officials this autumn in a bid to generate a "real discussion" on the subject.

The controversial issue of 'own resources' will be on the agenda, under which the EU institutions would have the power to raise their own revenue, reducing their heavy reliance on member-state contributions.

A future EU carbon tax or banking levy are among the possible sources cited so far, but opposition to the idea is fierce in a number of EU states, which have traditionally been more cautious about uploading powers to the EU level.

Their fear is that allowing the institutions to raise their own funding would provide them with an excessive level of independence. But Belgium intends to put forward proposals in the area regardless.

"Without imagination, the new financial perspectives will never be agreed," said a senior Belgian diplomat this week, recalling the torturous debate that preceded the current budgetary period (2007-2013).

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