UK’s withdrawal has left £62bn hole in bloc’s purse for the next seven years
Sun 16 Feb 2020 02.44 EST
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Presidents, prime ministers and chancellors across Europe will pack their bags later this week in preparation for a long weekend in Brussels.
They won’t, however, be taking in the baroque majesty of the Grand Place or savouring the local culinary treats.
Instead, they will be preparing for that most infamous of events, a “four shirter”, to use the clothes-packing gauge adopted by male diplomats to measure the length and horror of EU leaders’ summits in the Belgian capital. The thorny subject this time around? Money. And the problem? Britain.
The UK’s withdrawal from the European Union has left a huge €75bn (£62bn) hole in the bloc’s budget for the next seven years, 2021 to 2027. “And now we are fighting like ferrets in a sack,” said one EU diplomat with a sigh.
Covering items ranging from agricultural subsidies to science programmes and the EU’s efforts to combat the climate emergency, the new multi-annual financial framework (MFF) needs to be agreed by the leaders and an increasingly unpredictable European parliament before the end of the year. Without agreement, everything risks grinding to a halt in just nine months’ time, including the flow of cohesion funds, the cash dedicated to supporting the poorest member states.
Budget discussions in Brussels are always rancorous affairs. But this one is of a different order: everyone will have to pay more. No one wants to. EU capitals are bristling for a fight when they come to Brussels on Thursday for day one. Ominously for the diplomatic corps, an end date for the summit has not been fixed, but four days of talking are on the cards.
There are two main rivals in the budget battle. On one side are those who proudly describe themselves as “the Frugals” – the Netherlands, Austria, Sweden and Denmark (although there are some concerns within the camp that the new Austrian coalition government, being a bit Green now, has been lost to them, and that the Swedes are going soft). As the biggest net payers, the Frugals have been insisting on a budget of no more than 1% of the EU’s gross national income. The European commission’s initial proposal was for 1.1% – around €1.25tn over the seven years.
Then there are the “Friends of Cohesion”. “The Friends of Corruption, you mean?” spat one EU diplomat from a Frugal state.
The 15 under the FoC flag are the Czech Republic, Hungary, Poland, Slovakia, Estonia, Croatia, Malta, Slovenia, Bulgaria, Cyprus, Lithuania, Latvia, Romania, Portugal and Greece.
The Frugals say that the commission’s €90bn in cuts to agriculture and cohesion funding are not enough. The FoC say they are being unfairly targeted and that the richer countries should cough up some more, setting up a battle between east and west.
The debate is all the more toxic as the commission has proposed that cohesion funds should also, in the future, be conditional on member states respecting the rule of law. It is a red rag to the bulls in the nationalist governments of Hungary and Poland, who are already in a battle with Brussels over their judicial reforms, among other issues.
Then there is France and Germany. Berlin’s main concern is that they don’t come out of it looking worse than the French. In Paris, the government just worries about how much cash is going to go to its farmers, said one senior EU official. The fragmentation of the national debates leaves it impossible to say what will happen, said a second official, with even Irish politics in turmoil following the election that has made Sinn Féin the second largest parliamentary party.
Going in to the summit, the European council’s president, Charles Michel, a former prime minister of Belgium, has been engaged in furious shuttle diplomacy around the capitals.
Michel has put forward an alternative proposal for the budget to be 1.074% of the bloc’s gross national income (€1.094tn) in an attempt to split the difference between the warring camps.
“In this negotiation, we are not expecting member states to be happy, but the degree of dissatisfaction will be key,” said a senior EU official. “No chance,” responded a Frugal diplomat. “There is not a lot to say, except we won’t pay. And as the Rolling Stones song goes, ‘Time is on my side’.”