22nd Oct 2016

The EU budget - gifting the way to a deal

  • Mayotte, a small island off east Africa, is to benefit from EU coffers (Photo: asenat29)

This EU summit may see a deal on the bloc's next long term budget. If so, an unofficial 'gift' list will have played a small but significant role in reaching the agreement

As part of his efforts to get all 27 member states to agree how much and where money should be spent over the next seven years, EU Council President Herman Van Rompuy in November, during the last budget summit, made a series of pay promises to several governments.

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The list, for the most part, puts right a perceived budgetary wrong. And while the sums are often small in terms of the expected more-than €900 billion budget, it allows a leader to sign on the dotted line and sell the deal at home.

So it happens that Mayotte, a tiny island off Africa which became a French overseas department in 2011, is on the list. Due to become a territory of the EU at the beginning of next year, it is to be allocated €200 million.

The Baltic states are set to be compensated for their low per-hectare subsidies from the farm budget line.

Latvia is due €349 million, Lithuania's present for its farmers is to clock in at €266 million while Estonia is to get €146 million. If the sums are approved, Baltic farmers can be told straight away, they have travelled to Brussels to protest at being at the bottom of the subsidy pile.

Northern Ireland peace projects, lobbied hard for by Dublin, are to see €150 million while Lithuania, Slovakia and Bulgaria are to be compensated for the decommissioning of nuclear plants.

A region in Hungary, angry at the reduction in its subsidies, is to receive €1.2 billion while Italy, France, Spain, Slovakia, Portugal and Belgium are each to receive larger shares of structural funds due to high unemployment.

Absent from the November list are Poland, Romania, the Netherlands and Denmark, although Copenhagen is currently fighting hard to get a rebate from the budget.

More generally, the EU budget is a series of trade-offs. Budget lines here and raided to feed budget lines there.

France and Italy have been complaining that they are objectively entitled to a budget rebate. Instead of getting one, France is likely to be compensated via more farm money, while Italy should see generosity expressed through the regional development fund.

Spain, worried about how much it is receiving from the budget, will benefit significantly if the proposed youth unemployment fund is established.

The robbing of Peter to pay Paul attitude tends to most affect budget lines that are not politically owned by member states.

Whereas farm and regional policies have vigorous defenders among national governments, something like the connecting Europe facility, a commission-proposed project to boost infrastructure and networks among EU countries, is unloved.

Consequently this fund has been stripped right down to feed other politically more rewarding aims.

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