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23rd Oct 2020

EU budget talks collapse after MEPs seek new powers

A last attempt to reach an agreement for the 2011 EU budget failed on Monday (15 November) due to reluctance by member states to grant MEPs extra powers in future multi-annual budget negotiations. The EU commission will now have to draft a new proposal, while the first months of next year will be funded on the basis of the 2010 budget.

"It's not good news not to have a budget for 2011, but we will follow procedures," EU Parliament chief Jerzy Buzek told reporters in a late-night press conference after talks with member states broke down.

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The final collapse was mainly due to disagreements over procedures and extra powers granted to MEPs under the Lisbon Treaty, the EU's new rulebook.

Junior ministers from Britain and the Netherlands insisted that the only issue on the table was the budget for 2011 and declined to discuss contentious issues for the long-term budgetary perspective, such as raising more EU "own resources" through supplementary taxes or the "flexibility" of the budget when unexpected expenses arise.

Shortly after announcing €95 billion in domestic budget cuts, Britain has spearheaded demands for next year's EU budget to stay frozen at 2010 levels or go up by a mere 2.9 percent, or less than half the MEPs' original request.

"The Brits didn't want to hear about 'flexibility' as they argued it could create a perverse mechanism by which governments are forced to pay more into the EU coffers," one EU diplomat told this website.

Dutch officials were motivated both by similar spending cuts at home and by what the Dutch public perceived as a diplomatic defeat for the Netherlands when Albania and Bosnia were granted EU visa-freedom.

The Dutch EU affairs minister last week had promised that budget talks will only relate to the 2011 figures and "nothing else," so that any concessions on the MEPs demands for future negotiations would have been seen as a second failure.

For their part, MEPs insisted that the "stubbornness" of "a very limited minority of member states" will only aggravate future funding problems for the EU and national treasuries alike.

The chairman of the budget committee, French centre-right MEP Alain Lamassoure, lashed out at the national envoys, who had no mandate to negotiate anything else but the figure for next year and said that if they were not willing to discuss MEPs' powers, he would "take it to the European Council in December" when EU leaders will meet in Brussels

For some diplomats present in the room, the strategy of the European Parliament was bound to fail, because it wrongly assumed that member states would agree to a budget out of fear of being labelled as "anti-European" in case of a break down in talks.

"There will be a budget, based on 2010 figures. There is no drama, the world won't go under," one EU diplomat told this website.

EU budget commissioner Janusz Lewandowski was not of the same opinion. During the lengthy hours of negotiations he reportedly warned member states that failure to reach an agreement will create "bad blood" and even lead to higher borrowing costs for the eurozone's most embattled economies in Ireland and Greece.

A last-ditch attempt by the Belgian EU presidency to separate figures from the "political agreement" on the MEPs' powers was dismissed by the parliament's negotiators as "completely unserious." The euro-deputies had previously indicated that they would back a 2.9 percent increase in the budget compared to 2010, as demanded by 12 member states led by Britain.

This was a "concession" from the six-percent increase MEPs had voted on in plenary, justified by increased spending next year due to the new institutions created in 2010: the EU's new diplomatic service and three financial supervision authorities.

Back at square one, the EU commission will now have to come out with a new draft budget and another round of negotiations, at heads of government level, are to take place in December.

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