Paymaster countries call for further cuts in budget for 2000

Date: 13/05/1999

By Tim Jones

THE European Commission's already pared-down plans for EU spending in 2000 could face extra cutbacks following a less-than-enthusiastic welcome for the proposals from four finance ministers this week.

Governments which contribute more to the budget than they get back in EU subsidies are concerned that the Commission's proposed 4.4% hike in spending commitments to €85.6 billion is excessive.

When Acting Budget Commissioner Erkki Liikanen presented his plans to finance ministers this week, the Swedish, Dutch, British and French delegations all questioned the need for such a spending boost.

" We have only seen three pages of the Commission's plans and we need to see a lot more before we make a final judgement, but it is still a big increase," said a diplomat from a net contributor state.

The four have gone on the attack even though the total spending proposed by Liikanen is €1.7 billion below the ceiling for 2000 set at the Berlin summit in March.

Liikanen told ministers that the proposed increase in the sum to be kept in EU coffers was largely to cope with a €70-billion backlog of contracts signed but not paid for between 1993 and 1999.

At the same time, under the Commission's plans, money committed to cover all spending contracts would fall from €96.9 billion this year to €92.7 billion in 2000.

Liikanen has, however, warned that the draft budget will almost certainly have to be increased in the autumn because of the rising costs of MEPs' salaries and institutional pensions demands. It will also have to be adjusted in light of developments in Kosovo, with the EU and the World Bank taking the lead in financing the restructuring of Kosovo when the conflict ends.

The bank and the International Monetary Fund have estimated that a lengthy war would cost €290 million in humanitarian aid and €1.4 billion in balance of payments support to Albania, Macedonia and Bosnia. However, Acting Economics Commissioner Yves-Thibault de Silguy has warned that total costs will certainly exceed the €5.1-billion aid set aside for reconstruction in Bosnia and could even hit €30 billion.

Dutch Finance Minister Gerrit Zalm and British Treasury Minister Patricia Hewitt acknowledged the need for extra cash, but argued that this should be found by cutting spending elsewhere.

The budget proposals will be formally presented to budget ministers on 14 July and then scrutinised by the post-election European Parliament before being discussed again by ministers in November.