TENs cash hinges on cut-backs

Date: 27/06/1996

By Tim Jones

FINANCE ministers want to see extra EU budget cuts before they will even consider granting the European Commission an extra 1 billion ecu to fund research and transport projects.

Realising that his plan to redeploy up to 2 billion ecu in under-used farm spending had no chance of winning the unanimous backing of member states, Commission President Jacques Santer changed tack at last weekend's Florence summit.

Instead, he called for the agricultural guideline to be left unchanged while the expenditure ceiling for internal policies - now around 5.5 billion ecu - would be raised by 1 billion ecu.

At the same time, he offered to find savings worth 200 million ecu within the same area of the budget in 1998-99. Any decision, he promised, would be taken “in conformity with the imperatives of budgetary rigour”.

Under an agreement between all the institutions in December 1993, the Commission promised that any proposal to alter the EU's financial perspectives would be accompanied by proposed spending cuts worth at least 10&percent; of the whole package. Even though the package has shrunk from 2 billion ecu to 1.2 billion, the Commission has stuck to the 200-million-ecu cuts pledge.

“We kept to 200 million to give a signal from the Commission that we are prepared to go beyond 10&percent; for the sake of the TENs,” said a senior Commission official.

However, this will not be enough for the majority of the six finance ministers who opposed the whole idea of redirecting cash to TENs at their March meeting. At that time, the German, British, Dutch, French, Finnish and Swedish ministers - with the tacit support of Spain - issued a statement opposing the notion.

This time around, the first three will be looking for deeper cuts in internal policy spending than those on offer from the Commission. The Dutch government has even gone as far as drawing up a 'hit-list' of up to 20 programmes where savings of around 700 million ecu could be found in 1998-99.

“We are telling the Commission that if, as they say, TENs is the priority for the Community, then other programmes which are not priorities can be skipped,” said a Dutch official.

This may be an attempt by the EU's net budgetary contributors to kill off an idea they oppose in principle. All of them believe that the 8 billion ecu in spending on TENs already committed by the European Investment Bank and the 2.3 billion ecu set aside in the Union's budget is enough, and the delays in construction have been caused by red tape.

Since he struck upon the idea of a 'confidence pact' for employment, Santer has been pursuing extra money for the 14 priority TENs projects with unrelenting vigour and Germany, the UK and the Netherlands are calling his bluff.

“If Germany is against it, then the whole bloc of six or seven will also be very critical,” said a Dutch official. “The only chance they have is if they make enough economies in the budget to make it acceptable.”

The Commission's problem is that this category of the budget is under the control of the European Parliament. MEPs are able to insert spending on treasured projects and will have the final say as to whether cuts are made in both the 1998 and 1999 budgets.

Spending on research takes up 60&percent; of this part of the budget. The Fourth Framework Programme comes up for renewal from the beginning of 1999, so spending reductions could be made for its successor. Instead of killing off programmes, the Commission will focus on the non-renewal of schemes that expire during 1997-99.

This will not be painless. Programmes that could be hit include those in the areas of culture, education and training, energy, the environment, consumer protection, industry and statistics.

Research and TENs, which together accounted for 3.6 billion ecu in the 1996 budget, would be expanded.

“Everything else will be on the block,” said a Commission official.

This is sure to go down badly with the Parliament, which guards its budgetary powers jealously.