Bargaining set to go to the wire

How is the EU to be funded from 2014 to 2020? This is the issue to be settled at the European Council summit on 22 and 23 November. The European press reports that EU member states, which seem to be mainly concerned with their national interests, are far from agreement.

Published on 14 November 2012 at 15:21

"The EU is a double fiasco", announces Jyllands-Posten. On the one hand, plans for a banking union are moving at a painfully slow pace. On the other, negotiations on the EU budget for 2014-2020 are in deadlock. On 13 November, the European parliament even decided to suspend its participation to protest against the cuts demanded by certain states. The Danish daily continues —

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The clash between European capitals has been such that the 22-23 November summit could end with the collapse of the negotiation process, which will exacerbate the economic crisis in Europe. This same pessimistic conclusion has been voiced by key member state diplomats as well as ‘highly placed’ sources at the European Commission. [...] According to one such source, the bid to find a compromise may prove to be impossible, because several countries are blocked in their final position. This is not just the case with the United Kingdom, but with Sweden and Denmark which are also creating difficulties. The Danish government has threatened to veto the budget if it does not receive an annual rebate of one billion kroner [€134 million euros].

In Madrid, El Mundo remarks that "at times Europe is completely unable to move forward”. This is the case with —

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…three key issues on the EU political agenda [the banking union, the tax on financial transactions and the EU budget]. After several hours of negotiations [on 13 November], everything remained as before. The European Union was blocked and clearly unable to face its biggest challenge: to build greater economic integration at a time when the markets, which are beset by doubts about the future of the euro, are once again growing nervous.

“Hopes for a successful EU budget summit in Brussels are growing weaker and weaker”, Gazeta Wyborcza concludes in an editorial, only to add that if the British Prime Minister David Cameron decides not to veto a deal, “bilateral talks between Angela Merkel and Donald Tusk may conclude negotiations” at the upcoming summit. The German Chancellor will be trying to convince the Polish PM to accept inevitable funding cuts, however, hopes for “German kindness” are running high in Warsaw, not only because of ‘political closeness between Berlin and Warsaw’, but also because —

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... it is indisputable that [EU] funding for Poland stimulates the German economy far more than it does France’s or Britain’s. That’s why, despite being rather stingy these days, Ms Merkel may shell out something extra for Warsaw after all.

According to Gazeta Wyborcza, Poland can also count on the support of a coalition of 15 countries which are “friends of cohesion policy” and opposed to EU budget cuts, if it succeeds in holding its own in negotiations where everyone will be attempting to defend existing privileges. With regard to the prospect of a negotiation deadlock, La Stampa reports that Italy has at least secured the allocation of 670 million euro for the solidarity fund for the victims of last May’s devastating earthquake in Emilia-Romagna, which had been blocked by the refusal of “fiscal hawk” countries to contribute new money to EU coffers. But “everything else is lacking”, warns the Turin newspaper, including funds for the Erasmus programme which were included in a €9bn. package proposed by the Commission but later scuttled by the opposition of the dissident block led by the UK. British PM David Cameron even tried to persuade his Italian counterpart Mario Monti to switch sides, La Stampa reveals, when he proposed that the Italian premier should support a London-crafted alternative budget plan which would save Italy €2bn. in contributions each year. But Monti was not fooled, knowing that “such a reduction would mean losing part of cohesion funds for the southern regions of Italy”. At the same time, Rome is also seeking its own discount. Now that Italian per capita GDP is slightly lower than the European average, Monti wants to stop —

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... aiding countries which are more or less in the same economic situation” and will be seeking a €1bn.-€2bn. cut to Italy’s contribution for the 2014-2020 budget.

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