Money talks when power is at stake

Date: 14/11/1996

FOR years, the complexities of the Union's budgetary arrangements have deterred all but the most determined from trying to penetrate the thicket of arcane language and legal terminology.

That luxury of disinterest is something which serious EU players, whether their concerns are geo-strategic or geared to the minute detail of specific internal policies, can no longer afford.

For the annual Union budget has, particularly for the European Parliament, become a serious policy-making tool.

This year, MEPs are using the budgetary powers they share with the Council of Ministers to try to increase funding for Trans-European Networks (TENs), prevent cuts in key internal policies, promote democracy and human rights in Turkey, channel funds to regions hit by declining industries and ensure administrative changes in the European Commission.

The Parliament's major weapon is its ability to have the final say, within certain financial limits, over spending on all EU policies except agriculture when the budget is finally adopted in December.

In a rare show of unity, the Parliament and Union governments are agreed this year on the need for a rigorous EU budget, as member states implement austerity packages at home in a bid to meet the stiff criteria for entry into the euro-zone.

Both are looking to keep 1997 spending at 1996 levels of some 87 billion ecu.

But within that broad political objective, serious differences of approach have emerged and will be highlighted when EU ministers meet in Brussels next Tuesday (19 November) to complete their examination of the budget.

Some are highly political. Most EU governments object to the Parliament's efforts to juggle with the long-term financial figures both for overall annual Union spending and for each major policy category agreed at the Edinburgh European summit four years ago. MEPs have no intention of breaking through the overall ceiling on expenditure, but want to transfer unspent funds to help finance TENs, research and development and various internal policies.

The dispute pits the Parliament's argument that expenditure should reflect changing political priorities against a widely-shared government view that there is little point fixing long-term financial perspectives if they are subsequently changed.

A second area of discord is the increasingly common practice of making money available for specific, detailed areas of EU policy, such as renewable energy projects and a European voluntary service scheme, even though the legislation giving the green light to such programmes has not been agreed.

When all those involved - the Council, Parliament and Commission - turn a blind eye to the absence of the necessary 'legal base', no problems arise. But the decision of the UK, with backing from Germany, to challenge the legitimacy of certain social spending before the European Court of Justice has overturned this tacit agreement and sown uncertainty in almost 50 distinct spending areas.

MEPs and member states are under increasing pressure to establish a new agreement governing such cash allocations within the next four weeks. But so far governments have reacted coolly to the Parliament's suggestion that pilot projects and other schemes of less than three years' duration should be eligible provided an appropriate legal justification is at least proposed during that period.

Budget Commissioner Erkki Liikanen, who has welcomed the Parliament's decision to respect the financial rigours involved in preparing for the single currency, recently stressed the need for the various institutions to reach an early agreement on the legal base issue.

“This would be a new start for the budgetary process. We need a solution for budgetary financial management as there is too much improvisation now and it would augur well for relations between the Council and the Parliament,” said the Commissioner.

Increasing attention is also being paid to the MEPs' practice of holding back funds in key areas and only releasing them after extracting specific guarantees from the Commission or changes in policy.

This device is now being used to 'stimulate' Turkey's respect for human rights, and has in the past led to a tightening up of procedures for granting aid to central and eastern Europe and the former Soviet Union.

Occasionally, refinements are added. This year, the Parliament established a delegation of four senior MEPs to negotiate changes to the Commission's priority information campaigns before agreeing to release blocked funds. A similar group is now likely to monitor the EU's relations with Turkey.

For MEPs, this is proving a highly-effective way of using their budgetary powers to influence policy. But critics in the Commission and among EU governments believe the tactic is being overemployed and accuse MEPs of using it to interfere in internal management issues such as staffing policy.

In addition to these recurrent annual themes, each year the budgetary spotlight shines on some little-known area of Union activity which has managed to attract the rapporteur's particular attention.

Last year, the shafts of light were directed at the growing number of satellite agencies which have appeared in the EU's galaxy and provide an input into policy formulation and implementation.

This year, rapporteur Laurens Brinkhorst, a Dutch Liberal, has focused on the money the Commission spends on studies and congresses and the financial support the Union provides to a range of outside bodies and projects of European interest.

His investigations have revealed that the Commission financed 1,200 studies - equivalent to 100 a month - at a cost of 80 million ecu in 1995. Almost three-quarters of the total were initiated by just seven of the institution's 23 directorates-general.

In addition, the Commission allocated 34 million ecu for information and publications, a further 17 million ecu for meetings of experts and 23 million ecu for various conferences and congresses.

Brinkhorst accepts that some of the studies were an essential part of the Commission's work, but questions the absolute numbers involved and points to duplication between, and even within, departments; the total absence of any overall assessment of their effectiveness; and a lack of budgetary transparency.

“Some belt-tightening would be a good thing,” he concludes.

A parliamentary report prepared for the 1997 budget lists 250 projects of European interest or aimed at advancing the principle of integration which received 18.9 million ecu of EU grants last year. They ranged from European youth and boy scout movements to universities and farmers' organisations.

But Brinkhorst maintains that the list contains a number of discrepancies and notes that “often neither the title nor the activities described are particularly revealing”.

To ensure that such funds are not limited to a small group of EU insiders, he has suggested that bodies involving several member states should receive priority, that clear eligibility rules should be established and that details of applications received and subsidies granted should be published twice a year.

This trend for MEPs to focus on the minutiae of Union policies, as well as on the broader picture, is one that is undoubtedly set to continue.