By Bruno Waterfield - 12th December 2005
Failure to secure an EU budget deal for this week would be “careless” of UK leader Tony Blair, European Commission President José Manuel Barroso has said.
The Brussels chief has written to all national capitals and the British EU presidency warning that failure is not an option at Thursday’s European Council of Europe’s leaders.
“My message today is clear: we owe it to our citizens to come to a solution that is both ambitious and fair,” he told journalists.
“Failure - as was the case at the European Council in June - is not an option. In fact, as somebody put it, to fail once is unfortunate. To fail twice would be careless.”
“My message to European leaders today is clear: dig deep and find the political will and wisdom to find a way forwards. Stalemate serves no-one.”
Barosso’s intervention comes as jockeying over EU expenditure for 2007 to 2013 goes into overdrive and sees the commission seeking to rally support.
Importantly, Barroso’s arguments, set out in his December 12 letter, do not categorically reject proposals attacked by Brussels as unacceptable last week.
The commission is calling on the UK to increase overall EU spending above a total 1.03 per cent, or €847 billion, of Europe’s Gross National Income set on December 5.
Cuts set out by Britain are €23bn lower than proposals tabled in June – at a first failed EU budget summit – and €178bn below original commission projections.
“The final deal must therefore increase total spending, significantly, with an emphasis on the elements supporting modern growth and jobs agenda,” Barroso writes.
Brussels is also mobilising new EU member states behind a higher spending bracket by focusing on UK reductions to ‘structural and cohesion funds’ – cash aimed at Europe’s poorest areas, regions concentrated in the newest members states.
“The new members states need to be offered significantly higher levels of investment than in the current proposals,” argues Barroso.
To fund an increase in spending to bring Europe’s new members into the European economic mainstream, Britain should give some of its annual rebate.
Under the current blueprint, new EU member states are set to lose €14bn, a bitter pill sugared by a British offer to trim €8bn from the UK’s annual rebate – increasing London’s contribution in 2007 to 2013 from €50bn to €58bn.
Barroso argues that any British concession on its €5bn annual ‘abatement’ should be tied to the costs of EU enlargement and should not be temporary one-off sweeteners.
“The UK must make a further change to the abatement, linked to enlargement. Since enlargement is permanent, so should be this change,” he writes.
Significantly, on his part, Barroso has modified criticism of a UK call to change EU rules making it easier for new member states to actually spend funding.
The commission is now asking that changes be restricted to ‘cohesion’ funds and with the same relaxed rules – allowing more time and a wider range of beneficiary projects.
“I ask you apply any new de-commitment rules to all member states, and for the whole financing period,” he said.
Again, helpfully to Britain, Barroso has re-issued his proposals for a budgetary rethink half way through the 2007 to 2013 period.
“I have proposed a comprehensive review clause, both to reach a deal now and to allow a medium term overhaul of the EU's budget,” he wrote.
Rows over the level of EU farm subsidies have formed the backdrop to the current round of budget talks.
EU agriculture funding is frozen – at the demand of France in 2002 – leaving the only room for cuts from the regional policy payments aimed at giving Europe’s poorest areas infrastructure and economic growth.
The ‘structural and cohesion’ cash is a victim of a bitter fight between the UK and France over farm subsidies and the British rebate.
France is urging the UK to end the rebate to help fund enlargement, but London is refusing while Paris retains a lock on agriculture cash that benefits French farmers.
Paris will accept a review of farm spending in the budget mid-term, in 2008 or 2009, but without any cuts until 2014 or beyond.
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