‘Fairness’ only solution for budget

By Anna McLauchlin

Date: 03/03/05

Redistribution of the structural funds is the only way out of the EU budget deadlock, according to the Swedish ambassador to the EU.

Sweden, which is among the six member states clamouring for a budget cap of 1% of gross national income (GNI), will not accept more than half of these funds - used to promote economic growth in poorer EU regions - being distributed to the 'old' EU-15, Sven-Olof Petersson has said.

"There is no reason to transfer funds from one rich country to another that is even richer," he said.

Petersson argued that in Spain, which under the previous budget received €60 billion in structural funds and under the proposed budget would receive €30bn, 37% of citizens live in regions with gross domestic product (GDP) above the EU average, while in France the figure is only 30%. "This is not reasonable," he said.

The ambassador denied that the issue was penny-pinching and said that if the structural funds for richer member states were slashed, it could lead to increased funds for the new member states.

Though funds are currently capped at 4% of national GDP, he said Sweden was "prepared to look at different solutions to avoid an unfair situation".

Petersson insisted that the 1% cap demanded by Sweden, the UK, France, Germany, Austria and the Netherlands was not a starting position for negotiations but a "ceiling". But he stressed that that was still an increase from the previous budget.

"We want to increase the budget where we will see added value," he said, citing competitiveness, foreign policy and social development as top priorities.

There was the political will to reach broad agreement in June and Sweden supported the objective, the ambassador said, but he admitted that it would be "very difficult".

"The risk is that if we rush to a solution in June, the UK will keep the rebate, we will not reopen the agricultural debate, we will have a 1% cap and end up with a budget composed of structural and agriculture funds," he said. "I think that would be very bad for the EU."

Petersson said that Sweden supported slashing agricultural spending but that it would be "counter-productive" to launch a debate on the deal struck in 2002 by France and Germany. The government is one of those pushing for Bulgaria and Romania to be included in the spending ceiling, thereby saving an overall €16bn.

According to Sven-Olof Petersson, Swedish ambassador to the EU, redistribution of the structural funds is the only way out of the EU budget deadlock.