Moves to peg budget get a mixed response

Date: 10/07/1997

By Rory Watson

NEW plans for the Union's budget for the opening years of the 21st century look set to come under attack from the European Parliament next week for lacking ambition and imagination.

European Commission President Jacques Santer will tell MEPs on Wednesday (16 July) that the existing ceiling on the annual budget should remain until 2006, even though the Union is expected to shoulder the extra burden of new members soon after the turn of the century.

The proposal that the EU budget should never be greater than 1.27&percent; of member states' gross national product will please Union governments struggling to qualify for entry into the single currency.

But it will lead to conflicting demands as finances are stretched to pay for existing policies and prepare central and eastern European countries for membership.

“I am basically disappointed. I think that it is a sound policy to keep the 1.27&percent; ceiling for the Union's current activities, but we should foresee a small increase of, say, between 0.2 and 0.4&percent; for enlargement. That would be a very small price to pay if it meant that the applicant countries could successfully become members of the Union,” said Spanish Socialist MEP Joan Colom i Naval, who is preparing the Parliament's stance on the 2000-2006 budgetary forecasts.

There is also growing support among MEPs for the creation of a new fund aimed specifically at EU applicants. As Santer and his colleagues put the finishing touches this week to their wide-ranging Agenda 2000 proposals, they were still seeking a consensus on how to meet the applicant countries' pre-accession costs.

Some believe the money should come entirely from the Union's foreign policy budget, while others argue some should also be allocated from the Union's regional and social funds.

In a bid to allay existing EU members' fears that their own funds might be cut under the second option, the Commission is set to propose that overall regional and social funding between 2000 and 2006 should be 275 billion ecu, 75 billion ecu more than for 1993 to 1999.

MEPs are also expected to demand action on the growing reservoir of unspent Union funds. They calculate the difference between actual EU spending and the maximum permitted expenditure levels between 1993 and 1996 at 39.194 billion ecu.

Some of these savings resulted from deliberate policy decisions to build a financial cushion into the budget. But others were due to inflated expectations of agricultural spending and the failure of some member states to take up their full allocation of regional and social aid.

MEPs are expected to press for the introduction of more flexibility in the rules to allow unspent funding to be redirected to member states able to use the aid rather than returned to national finance ministries.

They are also likely to recommend that this November's special jobs summit should consider how unspent money could be used on a range of Union policies. “In a normal household, the practice would be to put the savings aside for a rainy day. For the Union, that rainy day could be the financial pressures of enlargement,” said one EU official.