Santer bids to bridge demand for resources

Date: 21/03/1996

COMMISSION President Jacques Santer will try to strike a bargain with EU leaders next week by dividing anticipated EU budgetary savings equally between pan-European job creation schemes and refunds to national exchequers.

Santer will present the 4-billion-ecu deal to EU leaders meeting in Turin next Friday (29 March) as a way of bridging the conflicting demands of reducing national budget deficits while placing badly-needed resources behind the creation of a Union-wide web of transport, energy and communication links.

The savings are expected to be made in EU agricultural expenditure over the next three years as recent farm reforms begin to bite and marketing conditions improve.

In normal circumstances, any budgetary savings are returned to member states. But Santer will argue that the Union should use some of the unexpected bonus to give a greater push to the fight against unemployment.

“We must boost the credibility of our policies. It is not enough simply to adopt White Papers. We must implement them. We need to increase the spirit of confidence,” he said in Brussels yesterday (20 March), pointing to the contribution Trans-European Networks (TENs) can make to infrastructure, the internal market and job creation.

Santer will propose that 2 billion ecu should be returned to member states by the end of 1999 and a similar amount transferred from agriculture to other chapters of the annual budget.

This would provide an extra 1 billion ecu for TENs, a further 700 million ecu for research and development, and another 40 million ecu to help small and medium-sized companies.

Santer is gambling that division of the anticipated savings and a direct appeal to EU leaders will neutralise the hostility already displayed by six finance ministers towards transferring unspent funds to TENs.

But at first sight, he has failed in this aim. “Nothing has changed since the Ecofin,” said a Dutch official. “It is the same proposal that the Commission formulated internally in January. Our point of view remains the same.”

Santer does not underestimate opposition to the proposal, which must win approval from EU governments and the European Parliament if it is to become reality. He argued yesterday that the move was in line with numerous European summit decisions, most recently in Madrid last December.

Nor, he insisted, would it break the budget ceilings laid down by EU leaders in Edinburgh over three years ago. “This is not just an accounting operation. We are translating into tangible form the political will frequently expressed for growth and employment. What we are doing is taking decisions in line with the logic of decisions taken before,” explained Santer, who believes the 2-billion-ecu package would also give greater credence to his 'confidence pact for employment'.

Budget Commissioner Erkki Liikanen described the initiative as forming an integral part of the Commission's wider policy of guaranteeing sound and efficient financial management. “To achieve this you need clear objectives and no gap between political decisions and budgetary decisions,” he said.

EU leaders have repeatedly given their political blessing to 14 priority TENs projects. But a new Commission report confirms that a further 1.7 billion ecu is needed to complete the schemes on time. The Commission believes the injection of a further 1 billion ecu from the EU budget could act as a catalyst to close the gap.