Santer’s budget report set to spark angry reaction

Date: 08/10/1998

By Rory Watson

THE European Commission is set to come under fire from the Union's major paymasters after suggesting that the present system of national contributions to the EU's budget need not be reformed until early in the next century.

Germany, the Netherlands, Sweden and Austria, whose net per capita payments into EU coffers are the highest in the Union, have been pressing for months for an overhaul of the budgetary system.

But in a highly detailed report on the present system released yesterday (7 October), the Commission effectively indicated that the time for change was not now, but rather when the first central and eastern European countries become members of the Union.

The report concludes that the three possible avenues of reform all contain “technical and conceptual weaknesses”. In addition, any change to the present arrangements would require the unanimous agreement of all EU governments and would, in all likelihood, take years to negotiate and implement. “A modification would entail long ratification delays and would suggest a process allowing the new financing system to become effective at the time of the accession of the first group of new member states,” it notes.

The most radical suggestion the study advances for reducing budgetary disparities is that 25&percent; of the Common Agricultural Policy budget could be handed back to member states, who would then make their own direct aid payments to farmers. This would be of immediate benefit to Germany with its small farming sector, but would be vetoed by a major agriculture country such as Ireland.

Commission President Jacques Santer deliberately trod a neutral path when he presented the report to MEPs in Strasbourg, refusing to indicate which of the possible reform routes, if any, he thought the most feasible.

He described the report as exhaustive, transparent, objective and open, stressing that it merely described various options and that a solid proposal would only emerge after governments had stipulated their clear preference.

Santer repeated the Commission's view that the benefits of Union membership could not be reduced “to a simple arithmetical calculation”. But he is obviously expecting some of the passion generated by member states' contributions to the EU budget to abate as officials and politicians come to realise the complexities of any reform. He also hopes that completion of the budgetary analysis will make it possible to focus minds on the regional, social and agricultural reforms contained in the Agenda 2000 package, so that negotiations can be completed by next spring's special EU summit in Cologne.