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29th Mar 2024

EU budget talks pitch rich against poorer member states

  • Talks are heating up on the EU's next long-term budget (Photo: Flickr/Kate Gardiner)

Poorer eastern member states have accused their richer counterparts of wanting to have it all their way on the EU's next longterm budget by cutting spending on policies that do not greatly affect them and upping the policing on how the money is spent.

With an agreement on the seven-year budget to be wrapped up by the end of the year, Tuesday's (24 April) talks on the issue for the first time went into the most controversial aspects of how much and where EU money ought to be spent.

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The policies on the table - cohesion funds and farm aid - account for about three quarters of the entire budget.

Poorer member states, already on the defensive because cohesion policy spending is due to be reduced by €18 billion between 2014 and 2020 are angry that countries such as Germany, the Netherlands and Finland want to chop a further €100 billion from the €1,025 billion budget proposed by the European Commission for the seven year period

Poland is leading the charge.

"In the commission proposal cohesion policy is already frozen in nominal terms at 2013 level. This is an absolute minimum," said Europe minister Mikolaj Dowgielewicz.

It is backed by a further 12 countries that have signed a 'Friends of Cohesion' statement. They fear that current plans would see money transferred away from the poorest parts of Europe to richer regions.

"Cohesion policy should not be the victim of any cuts." said Hungary. Slovenia said the policy - which finances growth in poorer regions - should remain a "strong" one.

They are opposed by the countries that pay most into the budget, however. "A large chunk of savings has to be found in cohesion policy because it is a such a huge budget," said the Netherlands' Ben Knapen.

"We find it a little bit too expensive," said Finnish Europe minister Alexander Stubb, referring to the cohesion funds.

"We need to say clearly that we must counter too many wishes for additional expenditure," said Michael Link of Germany, which circulated a paper entitled 'Friends of Better Spending.'

The discussion also saw member states strongly disagree over plans to extend "macro-economic conditionality" to more parts of the budget, including structural, rural development and fisheries funds.

Again the issue pits poorer fund-gobbling member states against richer ones.

"I absolutely love it!" said Stubb, referring to linking fund payouts to keeping national budget deficits within EU rules.

Several countries say that such conditionality should be applied to all spending to make it fair - although commission lawyers have said it is not possible to extend it to direct pay outs to farmers, research or external policies.

"I would like to see the macro-conditionality that would apply to Finland and the Netherlands and then we can talk. Find a good way to punish yourselves first and then we can talk about a fair and just way to talk about conditionality," said Poland's Dowgielewicz.

Diplomats say that both issues are intensely political. On top of this comes the fact that the EU has €200 billion in committed money that it still has to pay out of the current budget. This is making austerity-minded EU finance ministers very nervous and is contributing further to the push to reduce the overall amount of the next budget.

Denmark, which is moderating the talks, aims to have a full draft outline on the table by an EU summit in June, after having discussed the no-less-controversial issue of revenue raising (EU taxes) in May.

Talks are due to finish under the Cyprus EU presidency at the end of the year.

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