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Budget

It was only at the last possible moment, at the very end of November, that the European Union’s institutions struck a deal on the budget for 2013. But the budget that emerged from tough talks between the European Commission, the member states and MEPs left a higher-than-ever gap between commitments and actual payments, setting the stage for renewed inter-institutional hostilities in the coming months. The first corrections will soon have to be made. 

The annual budget negotiations proved even more contentious than in 2011. Janusz Lewandowski, the European commissioner for financial programming and budget, accused the member states of deliberate and systematic under-budgeting, a view shared by many MEPs, notably Alain Lamassoure, the French Christian Democrat who chairs the budgets committee. Member states responded in kind, accusing the Commission and the Parliament of living in a bubble. At a time when national budgets are being slashed, they argued, they could not possibly justify to their taxpayers why the Union’s should keep growing.

But what truly incensed the member states was Lewandowski’s request for an extra €9 billion ‘top-up’ to the 2012 budget. Lewandowski described this as the bare minimum required to pay outstanding invoices in 2012, a view fiercely disputed by many national governments.

It turned out, as part of the final deal struck at the end of November and approved by MEPs at their last plenary session of the year, that one-third of the requested sum could be carried over into 2013. This undercut Lewandowski’s credibility both with member states that had fought him and with MEPs who had backed him. The MEPs were especially unhappy when it transpired that sums totalling €1.4bn were still being checked for irregularities.

The gap between commitments and payments is now higher than in any year of the current budget cycle (2007-13), making a 2013 replay of the 2012 battles a near-certainty.

No deal was possible in 2012 on the EU’s long-term budget for 2014-20; national leaders failed to strike a compromise at a special summit in November, and are now expected to try again at a European Council in February.

The battle over the multi-annual financial framework was fought almost entirely among the member states, with little involvement from other institutions. The November summit left a difference of around €30bn between those seeking the toughest cuts – including Germany, the Netherlands and the UK – and a compromise draft produced by Herman Van Rompuy, the president of the European Council. Van Rompuy made a judgement call during the summit that this difference could not be whittled down further without a major fight that could jeopardise other elements of a future compromise and he cut the discussion short.

That approach is unlikely to work

the next time that leaders are asked to find a compromise, during the EU’s second special summit on the multi-annual budget, set for 7-8 February.

But Van Rompuy’s planners warn that the Council president will call the summit only if he is reasonably sure that a compromise is within reach. Failure to strike a deal early in 2013 could lead to all sorts of complications.

In practical terms, dozens of pieces of implementing legislation would need to be written and adopted before the end of the year so that EU programmes can continue without interruption. Politically, Germany’s forthcoming general election makes a deal in the coming month imperative.

 

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