Accessibility links

Breaking News

EU: European Commission Criticizes Calls For Budget Cuts

Brussels, 16 December 2003 (RFE/RL) -- Yesterday, six net contributors to the European Union budget -- Germany, France, the Netherlands, Sweden, the United Kingdom, and Austria -- sent a letter to the European Commission, asking it to limit the next EU budget to 1 percent of the bloc's gross national product (GNP).

The proposal means the enlarged EU would operate on a smaller budget than it does with the current 15 member states. The European Commission has criticized the plan, saying it would severely undermine jointly agreed ambitions.

The European Commission (EC) today said the letter from the six countries will have no immediate effect on its proposals for the next European Union budget for the years 2007 to 2013.

Gerassimos Thomas, a financial affairs spokesman, said the EC will not ask the six countries to reconsider their proposal. Rather, he said, the EC will start planning its next budget strategy in January by first establishing what the member states want to achieve, and only then look at the costs.

"We first want to agree what everybody wants to do, and according to this letter, everybody wants to create the most competitive economy, they want to protect our border, control migration, have more foreign and security policy, help poor regions, help cohesion, help employment, help growth. So we have to set out what we want to do, then we're going to see what are the means necessary to achieve these goals. So, this is the framework we are working on, and in that respect this letter would normally not influence our strategic approach," Thomas said.

Last night, EC President Romano Prodi issued a statement in which he said that a budget equaling 1 percent of the EU's GNP is not enough to achieve all these goals. Miracles, he added, are not his "speciality."

Prodi also noted that the six countries want to keep agricultural spending at today's levels, reflecting concessions won by France from Germany before the autumn 2002 summit in Brussels. Expenditure on the EU's Common Agricultural Policy (CAP) currently amounts to roughly 40 percent of the bloc's nearly 100 billion-euro ($123 billion) annual budget.

Most of the CAP money will go to France and other current member states until 2013, which is when the new member states will achieve full parity.

EC officials acknowledge that the proposal to cap EU expenditures at 1 percent of GNP would -- in real terms -- amount to severe budget cuts from 2007 onward. Although the budget stands at 0.98 percent next year, increasing costs of the present enlargement will take it to 1.12 percent in 2006. The budget ceiling is currently 1.24 percent of GNP. The EU's GNP will increase only marginally after enlargement.

Thomas today said the EC does not see a direct link between the collapse of the constitution talks at the Brussels summit last weekend and yesterday's letter. "I think that 'noises' about the positioning of different countries regarding the next financial perspective and 'noises' about Germany's position were already known," he said "The letter is obviously new, and the number of countries signing the letter is a new factor. But the fact that one of the signatories -- Germany -- signed this letter, I don't think it's a surprise in the sense that they had publicly made 'noises' and said these things in the past."

However, Germany made it clear in the run-up to the summit that it sees "parallelism" between the constitution talks and its willingness to sustain present funding levels. Germany is already in fiscal difficulty, running a budget deficit that breaches the Stability and Growth Pact underpinning the euro.

The summit foundered over the insistence of Poland and Spain on keeping the present Nice voting rules, which grant them voting strength disproportionate to their size. Germany and France both wanted new arrangements that would better reflect their size but would also ease decision making within the EU.

Spain is currently the biggest recipient of EU development aid, expected to be eclipsed by Poland once it joins.