MEPs to urge overhaul of budget system

Date: 27/11/1997

By Rory Watson

EUROPEAN Commission plans to extend the existing financial strait-jacket on Union expenditure for a further seven years will come in for widespread criticism from MEPs next week.

There is a growing feeling within the European Parliament that the Commission has presented an over-rosy picture of the EU's ability to handle the economic challenges ahead and has passed up an ideal opportunity to overhaul existing budgetary arrangements.

The criticisms will be aired next Wednesday (3 December) when MEPs examine a wide-ranging report by Spanish Socialist member Joan Colom I Naval on the financial framework for the Union between 2000 and 2006.

The Parliament is determined that its views on the EU's budgetary future should be known before Union leaders meet in Luxembourg next month, and should be taken into account by the Commission when it tables its formal proposals in the first half of next year.

Colom I Naval has already warned that to maintain the ceiling at 1.27% of gross national product when the current arrangements expire at the end of 1999 "might well diminish the impact of the challenge [of enlargement] and strait-jacket the Union, thus putting an end to hopes for the development of the new policies laid down by the treaties".

Colom I Naval acknowledges that the Commission's decision not to try to increase national contributions to the EU's coffers was partly dictated by the difficulties member states are encountering in establishing the single currency. "Nonetheless, not to keep open the option of revision of the ceiling in the light of existing variables would appear to be a political miscalculation which Parliament should rectify," he insisted.

MEPs are expected to support his view that the new seven-year financial package should be automatically revised once one or more applicants sign up to Union membership.

He also believes a review should be triggered if savings from reforms of agricultural, social and regional policies are not as great as anticipated and if annual economic growth falls below the 2.5% forecast by the Commission.

Supporters of an increase in the EU's budget fear that maintaining the status quo could lead to a squeeze on existing internal policies designed to bridge the social and economic divide between its current 15 members and could also mean a shortfall in aid to applicant countries.

MEPs will be told next week that under the Commission's proposals there would be an accumulated reduction of 10.2 billion ecu in Union finance to existing member states from the regional, social and cohesion funds between 2000 and 2006. In addition, the amount of aid being considered for the applicants and new members over the same time-frame is estimated at just 74.8 billion ecu - equivalent to 0.00127% of Union GNP for the entire seven-year period.

The Spanish MEP insists that, "in absolute terms, the amount is marginal by comparison with what is at stake, in political terms, in the enlargement process".

Euro MPs also intend to use the debate on the Union's finances to try to revise the political agreement between the Parliament and EU governments on the budget's operation. They hope to tilt the balance of power more in their favour to give MEPs a greater say over annual expenditure.

They will also propose ending the current practice of returning any EU funds which remain unspent at the end of the year to national exchequers. They will recommend, instead, that the money be placed in a special fund to cover unexpected developments inside the Union and to help meet the costs of enlargement.

The Commission will also be called on to prepare a report on how to reform the system used to finance EU expenditure for the past 40 years.

The Parliament will argue that the time has come to demonstrate imagination and political courage in revising a system which does not create a financial link between taxpayer and Union institutions and is no longer able to ensure that the European tax burden is fairly distributed.