Financial Perspectives’ 2008/9 Review The European Council decided on the Financial Perspectives on 19 December 2005 under the British Presidency Part III of the Decision states: The European Council (…) invites the Commission to undertake a full, wide ranging review covering all aspects of EU spending, including the CAP, and of resources, including the UK rebate, to report in 2008/9. On the basis of such a review, the European Council can take decisions on all the subjects covered by the review. The review will also be taken into account in the preparatory work on the following Financial Perspective. (Council of the European Union, ‘Financial Perspectives’, 15915/05, Brussels, 19/12/2005) That is what we are going to do! WaCoPaS Multiannual Financial Framework

Timetable 25 April 2006: Commission delivers a proposal Proposal by the Team of tutors: Concentration on the first 4 headings of the agreement –Sustainable growth –Preservation and management of natural resources (incl. CAP) –Citizenship, freedom, security and justice –EU as a global player 10 May 2006: Member States/European Parliament deliver minimum and maximum papers (Commission only minimum paper) Coalition / Compromise negotiations take place Presidency prepares a compromise proposal based on / in cooperation with (?) the Commission for the negotiations in Warsaw 25/26/27 May 2006: European Council in Warsaw WaCoPaS Multiannual Financial Framework

Institutions WaCoPaS Multiannual Financial Framework

European Parliament Role At first sight limited in the actual negotiation, BUT the member states should not disregard the position of the EP The FP can only enter into force through an inter-institutional agreement between the EP and the Council, i.e. the budgetary authority Position Calls for ‘appropriate’ financial resources for the EU Political priorities such as competitiveness, growth and employment / citizenship, freedom, security and justice and budgetary priorities need to be brought in line Stresses the need for more flexibility in the annual budgetary procedure, i.e. the FP cannot replace the yearly budgetary procedure WaCoPaS Multiannual Financial Framework

Commission 3 priorities during the negotiation in 2004/2005: Promoting sustainable development by completing the internal market and mobilizing various policies (economic, social and environmental) to that end. The objectives of competitiveness, cohesion and the protection and management of natural resources also fall under this heading. Giving meaning to the concept of European citizenship by completing the area of freedom, justice and security and ensuring access to basic public goods and services; Promoting a coherent role for Europe as a global partner. Position: Believes that the significance of the challenges identified justifies an increase in the budget but can be drawn up within an overall own resources ceiling of 1.24% of GNP. Suggests that from 2013 onwards the financial perspective should be established for a period of five years, which would fit in better with the institutional timetable Calls for the solidarity found to be integrated into the financial framework. Political context regarding the 2008 review: Institutional weakness of the Barroso Commission, lack of political leadership Uncertainty on the institutional future of the EU (draft constitutional treaty) WaCoPaS Multiannual Financial Framework

Council Secretariat Crucial role Formally: simply support of presidency –minutes / synthesis report – together with presidium –Collecting written interventions –Timing of the meetings But: Power of drafters –Importance of the first text –can help to build informal compromise (in mission of presidency?) tension between member states interest and EU interests own interests WaCoPaS Multiannual Financial Framework

Members States WaCoPaS Multiannual Financial Framework

Czech Republic (Presidency) Priority as Presidency: Finding an Agreement Priorities : Maintaining the EU budget’s subsidies for poor regions… and specially for the CR Very strong support for the structural funds and the Cohesion funds Other positions : Support to the agreement on the financing of the CAP from 2002 In favor of expenditure supporting the goals of the Lisbon Strategy Possible coalition partners: other new MS WaCoPaS Multiannual Financial Framework

France Context : Traditional support for the progress of the EC budget (Mitterrand…) Europe as a delicate political issue : refusal of the Draft Constitutional Treaty by referendum (29th May 2005) Position : Support to the principle of a limitation of the EC budget : a shift in France European policy ? Strong support for CAP spending (refusal to re-consider the Chirac-Schröder agreement) In favor of a suppression UK abatement : tensions between Blair and Chirac Political context regarding the 2008 review : Presidential election in 2007 : Chirac will leave. Will CAP spending still be considered as a major priorities by France? Possible coalitions : Germany, Mediterranean countries? WaCoPaS Multiannual Financial Framework

Hungary Context : Decrease in EU-enthusiasm one year after entry : failure to bring increased political and economic stability ; old Member States put a curb on economic integration of the new Member States Hungary is looking forward to closing the transition period and acquiring the status of a full Member State. Position : Strong support for high EU budget : cohesion and structural funds are to be raised in order to close the economic gap within the EU Strong support for CAP spending and the current CAP agreement In favor of a fair burden sharing, e.g based on GNI level The British rebate is not a main issue as long as it is not a brake for a high enough budget Possible coalitions : New member states for higher budget Cohesion and structural funds beneficiary countries (Spain, Italy, Portugal) Agricultural countries on CAP agreement WaCoPaS Multiannual Financial Framework

Ireland Context: Former net recipient, profited a lot from cohesion funding Stresses importance of the Lisbon agenda goals and cohesion funding especially for the new member states Position: Encourages more generous budget than 1,0% (in favor of the Lisbon agenda goals and cohesion funding) Strong support for CAP spending In favor of a suppression UK abatement Possible coalitions : New MS, “small” MS, europhile MS… WaCoPaS Multiannual Financial Framework

Italy Context : Net contributor to the union’s budget Major recipient of the Union’s cohesion policies Position : Is for maintaining a rather tight budget (the ceiling of this budget may be fixed up to 1.06 of the union’s GDP) Refuses to increase its net contribution to the Union’s budget The significant reduction of the UK rebate was one of its major priority May accept a redirection of funds away from CAP towards other areas (such as Denmark) Strongly opposed to any reduction in cohesion policy funds (such as Spain) Political context regarding the 2008 review : Possible changes of Italy European policy: Berlusconi vs. Prodi WaCoPaS Multiannual Financial Framework

Netherlands Context : Rejected the Commission’s proposal of an increase in the budget to 1.24% of EU GNI in 2004 Rejected the « generalised correction mechanism » proposed by the Commission during the Luxembourg presidency because it did not offer enough compensation Europe as a delicate political issue : refusal of the Draft Constitutional Treaty by referendum (June 2005) Position : For a new orientation in the spending policy: only the poorest members should benefit from structural funds; the agricultural costs of Bulgaria and Romania should be reduced, cuts in export subsidies For maintaining the budget ceiling of 1% For reducing its net contribution to the budget Possible coalitions : Sweden? UK? WaCoPaS Multiannual Financial Framework

Spain Context : For a long time a net receiver, global financial position towards EU is tending to neutrality Strong beneficiary of Development funds since 1986 Eligibility to Cohesion Funds will stop soon due to strong growth rates and a raise in standards of living level. Number of regions eligible to Structural Funds strongly threatened. Position : Against any global reduction of European budget spending (new MS) Supports a phase-out of regional aids, and a share contribution to enlargement costs Strong commitment for spending related to Security and justice (terrorist attacks) and the fulfilment of Lisbon objectives Not in favour of a reduction of the CAP amounts Very strong intention to reduce the UK abatement (3rd largest contributor after France and Italy) Possible coalition partner: France? WaCoPaS Multiannual Financial Framework

Sweden A “modern” budget : Critics of the EU model of expenditure. In favour of reform of the CAP. Strong supporter of a modern budget profile, i.e. supporting growth, research and development Wants to connect the financial perspective and the Lisbon strategy A “reasonable” contribution : Sweden is among net contributors Supports a share contribution to the budget Willing to support the enlargement but refuses for relative rich countries in southern Europe WaCoPaS Multiannual Financial Framework

Germany Context Has long been the paymaster of the EU; however, in the current economic situation does not want to stay in this position Position Wants a budgetary ceiling of 1,00% of GNI, but is open to negotiate Would welcome a reduction / abolishment of the British rebate, but this is not the most important issue at stake Criticizes a reduction of payments from the structural / cohesion funds to the new member states The French-German compromise on CAP was not to be opened up again in 2005; however, for the 2008/9 review there should be the possibility for new negotiations Possible Coalition Partners Net payers (‘letter of the six’), new member states, France WaCoPaS Multiannual Financial Framework

United Kingdom Context Very Eurosceptic public Position Wants a FP that can be sold to the public, therefore –the total expenditure by the EU must remain low –the British rebate must be protected –the Common Agricultural Policy needs to be cut back –the budget must appear to be modern and responsive to the problems currently facing Europe Possible coalition partners Net payers (‘letter of the six’) WaCoPaS Multiannual Financial Framework

Poland Position Against reduction of the overall budget to make sure that policies like CAP and structural assistance are phased in for the new member states as soon as possible. Cautious about the proposed ‘Globalisation Adjustment Fund’ Against earmarking large parts of the structural funds to ‘growth and jobs’ (Lisbon Strategy) In favour of abolishing the British rebate and against a general correction mechanism for net payers Possible Coalition Partners New member states, France WaCoPaS Multiannual Financial Framework

Portugal Position No reduction of the overall budget Ensure that the cuts for the current cohesion countries are as small as possible Importance of the funds for ultra-peripheral regions (Azores, Madeira) Possible Coalition Partners Greece, Spain, new member states (overall size of the budget) WaCoPaS Multiannual Financial Framework

Greece In Principle The Luxembourg Presidency Proposal is considered as a minimum (1,06% of GNI) The redistributive dimension of the EU finances should correspond to its quasi-federal ambitions at a time when enlargement has brought in countries with important structural problems In Practice Most important issues are agricultural and structural funds including support for Mediterranean products and fisheries Possible Coalition Partners: New member states, Portugal, Spain WaCoPaS Multiannual Financial Framework

Finland Context Finland is a net contributor and does not want to see its net contributions rise Position Supports the Commission in its opinion that competitiveness is important, but does not want to favour it at the cost of agricultural policy Against the British rebate, but this is not the most salient issue Main interest: rural development and regional policy Possible Coalition Partners Net payers, possibly esp. France WaCoPaS Multiannual Financial Framework

Luxembourg Context The negotiations on the FP failed in June 2005 under the Luxembourg Presidency Position The Luxembourg Presidency compromise proposal foresaw: –a budget volume of 1,06% GNI –a reduction of the British rebate, mainly related to more spending for cohesion policy in the new member states More money for competitiveness, less spending on CAP Generally in favour of the „Globalisation Adjustment Fund“ proposed by the Commission Possible Coalition Partners Many member states had been able to agree with the Luxembourg proposal, except for the UK, Sweden, the Netherlands, Spain and Finland WaCoPaS Multiannual Financial Framework

Latvia Context EU is seen as a means to reduce „social and economic backwardness“ (Prime Minister Kalvitis) Position Most important: cohesion fund In favour of reassessing the priorities of the EU budget especially in relation to CAP Against the British rebate Calls for solidarity between member states Possible Coalition Partners New member states, budget modernizers WaCoPaS Multiannual Financial Framework

Slovakia Background information Slovakia is a very liberal market economy (flat income tax of 19% for everybody) Position In favour of a modernization of the budget –Reduction of CAP spending –Increased investment on education, research and information technology Against the proposed „Globalisation Adjustment Fund“ Possible Coalition Partners New member states, UK WaCoPaS Multiannual Financial Framework