Abstract
The Multiannual Financial Framework (MFF) is the budget of the European Union and the most important tool to finance common policy areas, actions and strategies. Upon a proposal from the European Commission, it has to be approved by the majority of the members of the European Parliament, before it can be unanimously adopted by the Council. Furthermore, the Own Resources Decision has to be adopted with unanimity within the Council and be ratified by all 27 Member States in accordance with their constitutional requirements.
Reaching an agreement between the three negotiating institutions will not be straightforward, as views on the development of the financial resources of the European Union diverge considerably. Nevertheless, a decision has to be taken by the end of 2012 in order to be able to implement the new MFF properly.
With this paper, the Centre for European Studies contributes to the debate. The paper describes the European Commission's proposal, the European Parliament's resolutions on the topic as well as the positions of two Members of the Council. In addition, the paper sheds light on where the positions differ and where there is common ground and room for compromise.
In June 2011, the European Commission issued a communication titled A Budget for Europe 2020, in which it proposed a new MFF 2014–2020 having an overall amount of €1,025 billion or 1.05 % of the EU GNI in commitments and €972.1 billion or 1 % of the EU GNI in payments. It suggested a decrease of the cohesion policy, concentrating on the poorer and the weakest regions, and also the introduction of a new category: transition regions. Market-related expenditure and direct payments within the Common Agricultural Policy (CAP) would decrease. Furthermore, resources should be reallocated to priority areas such as pan-European infrastructure, research and innovation (competitiveness), education and culture, securing the EU's external borders and external relations policy priorities such as the EU's neighbourhood policy (ENP). Last but not least, a proposal was put forward to simplify the current system of rebates and corrections.
The European Parliament set out its position and priorities on the next MFF in its resolutions from 2007 (own resources) and 2011 (MFF). It first of all strongly favours the introduction of own resources in accordance with the Lisbon Treaty; however, the Parliaments’ resolution does not put forward a concrete proposal in this regard. The European Parliament furthermore opts for an increase of the total level of the Multiannual Financial Framework to at least 1.11 % GNI, and emphasises the need to achieve growth and competitiveness within the EU. This is why areas like research and development should receive more resources. Last but not least, the EP calls for a more efficient budget, to be achieved by simplifying rules, mechanisms and instruments of the different policy areas, and through more focus on result orientation.
The Polish view on the next MFF is to some extend similar to that of the European Parliament, as it acknowledges the need for a proper level of resources. Poland is against spending cuts, demanding that the size of the budget should not be less than 1.12 % of EU GNI, or at least kept at the level of 2013, with the needed adjustments due to inflation. An ambitious cohesion policy is needed especially in times of crisis; therefore, the proposed capping at 2.5 % of GNI is seen as too low. Poland opts for strengthening the second CAP pillar, restructuring rural areas, as well as a decoupling of the system of payments from historical production volumes. It also asks to avoid reducing the discussion on the budget to the particular interest-driven logic of balance of payments. Therefore, the EU needs to have its genuine own resources as required by art. 311 of the Treaty. Moreover, Poland considers the fairest decision to be that none of the Member States receives a rebate.
Decisive for the Dutch government during the upcoming negotiations will be the net position and the magnitude of correction the Netherlands will receive in net terms. The proposed gross annual reduction of €1,050 million for the Netherlands should be increased in such a way that the Dutch net position improves with €1 billion annually. In the Dutch view, the MFF 2014–2020 should be nominally frozen at the 2013 level. Compared to the EC proposal there should be less spending on cohesion policy, which means that support should only be given to the poorest regions in the poorest Member States. However, this position is not shared by Dutch regional and municipal authorities, who are in favour of an EU-wide cohesion policy. Also, the introduction of new own resources is not needed, as the power to tax should stay a matter of national sovereignty, and all proposed off-MFF expenditure should be part of the MFF and therefore integrated into the annual EU budget.
It can be concluded that both the European Parliament and the Council accepted the Commission's proposal as the basis for the negotiation. However, only the EP has an official position at this time; therefore, it would facilitate the negotiation between the various institutions if the Council would formulate a clear and detailed opinion on the European Commission's proposal.
When speaking about the overall level of the budget, the European institutions (European Council, European Parliament and European Commission) should keep the long-term strategic objectives and interests of their citizens in mind in reflecting on an adequate level of funding for policies developed at the EU governance level.
The analysis shows that all parties agree that the current MFF needs to be changed to respond to new EU priorities and that the EU 2020 strategy for smart, sustainable and inclusive growth forms a good compass for this reflection. This reprioritisation will imply, though, choices between various headings as well as regions.
As there is also support for a more result-oriented approach towards projects and policies financed with the EU budget, the proposal of the Commission to conclude partnership contracts covering all EU funds under shared management should be used to the full. In the same context, one should implement strictly the proposed conditionality mechanism, which could give rise to the suspension of funding based on a comprehensive set of ex ante-defined results.
Last but not least, it is hard to explain to citizens that the EU institutions do not respect all the provisions of the Treaty. Therefore, the institutions might agree to introduce an own resource step by step.