Tuesday

26th Jul 2016

Focus

Eastern European projects at risk in EU budget spat

  • Lodz, Poland: A €3.4 billion chunk of the €4.7 billion is for bridges, highways, waste management (Photo: msz.pl)

Eight member states have signalled opposition to a European Commission request to increase the 2014 budget by €4.7 billion to cover late bills, primarily for infrastructure projects in eastern Europe.

The funding gap emerged after the bloc's 2014 budget was adopted, meaning it has to be paid from a "contingency margin" – a buffer which can be used in emergency cases to increase the EU's annual spending.

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But in a "common statement" seen by EUobserver, Austria, Denmark, Finland, France, Germany, the Netherlands, Sweden and the UK oppose the EU commission's request to activate the margin.

"A mobilisation of the contingency margin in 2014 to pay part of the outstanding commitments on the cohesion policy would both be legally questionable and unnecessary," the eight states say.

A €3.4 billion chunk of the €4.7 billion is for late payments on cohesion policy projects – bridges, highways, waste management – in post-Communist member states.

Most of the rest is to go on youth employment projects and research.

But the budget spat also puts a question mark over macro-financial assistance to Ukraine – the EU last year planned to grant Ukraine €1.1 billion in aid. The money was this year topped-up to €1.6 billion, with €250 million to be paid out in June.

Germany, France, Britain and their five western European allies argue that payments for projects which had been planned in the previous EU budget (2007-2013) "cannot by definition be considered as unforeseen circumstances" and that it would be illegal to use the emergency buffer.

"A proposal for the mobilization of the contingency margin in 2014 would not only be legally questionable but also unnecessary, premature and not a 'last resort' option. The Commission should consider alternative options to manage any 2014 payment pressures, including re-prioritisation and the reimbursement of end-2014 claims in early 2015," the statement notes.

On the other hand, the eight countries say they are willing to fund humanitarian aid programmes and the Erasmus student exchange scheme "through appropriate procedures".

"Given what we've seen in the European Parliament elections, you can't imagine that EU citizens will want to contribute yet more money to Brussels. There's a strong message from many countries that the Commission needs to think again before using the contingency margin in this way," an EU diplomat said.

As for the commission, it says it still has money for another three or four months, but if the increase is not approved, it will run out of cash before the end of the year when it comes to the commitments pledged by the EU after the 2014 budget was adopted.

"Out of the €4.7 billion, we don't need all the money from member states. We have calculated that revenues from competition fines and redeployment of budget lines could fund more than half of it. So we are only asking for €2bn extra," EU commission spokesman Patrizio Fiorilli told this website.

Fiorilli said it was "normal" for groups of states to oppose the commission proposal – the third change to the budget this year.

"We wait for a position of the council as a whole," he added.

A majority of member states in the Council needs to approve or change the proposal, which is then passed on to the new European Parliament – a process which will take several months.

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