The EU Member States remain unable to agree a budget; the special summit to discuss the Multiannual Financial Framework (MFF) on 20 February remained unsuccessful. The negotiations failed not least because of the tough attitude of the “Frugal Four” on the one hand and the “Friends of Cohesion” on the other.
The Multiannual Financial Framework (MFF) is the long-term budget of the EU. The current negotiations centre around the budget for the next seven years, hence the period 2021 to 2027. How difficult these negotiations are is not least illustrated by the fact, they have been ongoing for almost two years. Whilst the Commission recommended a percentage of 1.11 % of the Gross Domestic Product (GDP) for the budget, the EU Parliament is demanding a volume of 1.3 %. The European Council, which must unanimously agree the proposal, is still not any closer to an agreement.
“Frugal Four” vs. “Friends of Cohesion”
In the Council, a small group of (meanwhile) four Member States insists that the 1 percent mark must not be exceeded. Part of these “Frugal Four” - apart from the Netherlands, Sweden and Denmark - is Austria. However, Europe Minister Karoline Edtstadler (ÖVP) recently proclaimed that in the end “everybody had to be willing to compromise”. Germany, until recently part of the (then still) “Frugal Five”, signalled its willingness to compromise even before the special summit. “Germany arrives with great determination to find a solution”, said Federal Chancellor Angela Merkel. Diametrically opposed to the attitude of the “frugal” net payers is the group of the so-called “Friends of Cohesion”, those Member States that traditionally have to gain more from the EU budget. Apart from a well-funded Cohesion Fund, it is particularly important to these countries to secure appropriate funds for the Common Agricultural Policy (CAP). The Italian Prime Minister Giuseppe Conte announced at the end of the summit, the “Friends of Cohesion” had awarded Italy, Rumania and Portugal the mandate to prepare a counterproposal to the demands of the “Frugal Four”.
New Projects der Commission
How important a strong MFF is for implementing the Commission’s political agenda, was also emphasised by the EU Commissioner for Budget and Administration Johannes Hahn. Without an appropriately funded budget, projects such as the European Green Deal, could not be implemented. However, the fact that the present budget proposal goes back to the Juncker Commission poses a problem, as the original proposal did not yet consider the key projects of the new Commission - apart from the Green Deal for example the Just Transition Fund or the recently introduced Digitisation Package.
EU Parliament announces resistance
The same line is also taken by the President of the European Parliament, David Sassoli, who declared at a press conference that one could not support a Green Deal without being prepared to make the necessary resources available. At the same time he issued a clear threat: Parliament, without whose majority decision the Multiannual Financial Framework cannot be adopted, was prepared “to reject any proposal that did not consider the positions of MEPs”. Eider Gardiazabal, spokeswoman of the Progressive Alliance of Socialists and Democrats (S&D), also touched on the possibility of a veto by the EU Parliament. The proposal by Council President Charles Michel on 14 February to determine a volume of 1.074 % was unacceptable.
A budget that unites Europe
On 19 February, the Friedrich-Ebert Foundation, in cooperation with MEP Margarida Marques (S&D) organised a workshop under the title “Achieving a socially just, green and forward looking Multiannual Financial Framework 2021-2027”. Both Marques and Brando Benifei, shadow rapporteur of the S&D faction on the European Social Fund Plus (ESF+), emphasised within the scope of the workshop the importance of a strong Multiannual Financial Framework as well as an appropriately funded ESF+. Only then progress could be made towards a social Europe. This is also the opinion of the Chamber of Labour, which had already pointed out at the start of the budget negotiations in 2018 that the budget of 101 billion allocated to the ESF+ - the equivalent of 7.9 % of the original volume (1.11 % of the Gross Domestic Product) proposed by the Commission - would equal a reduction of the funds compared to the last Multiannual Financial Framework. Instead, the funds for the ESF+ should be increased to 10 % of the Commission proposal to enable it fulfil its missions.
What are the next steps?
Expectations were already rather muted in the run-up to the summit. Even though Council President Charles Michel appealed to all participants to show willingness to compromise, the fronts between Member States seemed to be hardened. It is therefore hardly a surprise that on Friday, 21 February the summit broke up without a deal. Shortly before the end of the summit, Charles Michel proposed a budget volume of 1.069 % - without success. "We have worked very hard to try to reconcile the different concerns, the different interests, the different opinions on the table. But we need more time", said Michel at a subsequent press conference with Commission President Ursula von der Leyen. In the meantime, it remains open as to how and when the negotiations on the Multiannual Financial Framework will continue.