Negotiating the EU envelope

For a good while now, EU countries, including Malta, have been enga­ged in a heated debate on the EU budget for the years to come.

Known as the EU’s Multiannual Financial Framework (MFF), this exercise is relevant because it sets the limits of the EU budget over a period of time. In other words it spells out how much money the EU will collect from its members and how it will spend it.

Covering a period of seven years, the MFF is an exercise in EU long-term budgetary planning which then allows countries to roll out projects that they expect the EU to help them fund.

The current MFF started in 2007 and ends in a year’s time, at the end of 2013. As this period is gradually coming to an end, the new MFF is being discussed as we speak. The new MFF will also last seven years, from 2014 through to the end of 2020.

As to the amount, it may come as a surprise to many that the EU budget represents no more than one per cent of the Union’s combined wealth. That makes it a very small budget by any comparison. Even so, since the MFF involves money it is understandable that getting EU countries to agree on it is no easy feat.

There are numerous controversial issues which need to be addressed. Chief among them is which countries will be the main contributors, that is, pay more than they receive and which ones will be the main beneficiaries, that is, receive more than they pay. Germany along with countries such as the Netherlands and the UK are among the contributors. On the other hand, all the countries that joined with us in 2004 have since been net beneficiaries.

This particular MFF is more complicated than others before it because it comes in the aftermath of a financial crisis where for the first time ever the EU is discussing real cuts rather than increases.

All the while, the EU is also working within the framework of 27 countries which still have a wide differences in levels of prosperity. And the most recent accession of two relatively poor countries, Bulgaria and Romania, has also made other countries look wealthier by contrast rather than in real terms. Malta has this concern and insists it is just not right for countries to lose out on EU aid simply because they are statistically richer in contrast to poorer members.

Indeed, Malta has teamed up with a group of like-minded members insisting that generous EU funding should continue to be channelled to those members whose level of development still lags the EU average. This group is known as the Friends of Cohesion, which is another word for solidarity.

Last November the President of the European Council, Herman Van Rompuy, presented a compromise based on significant reductions compared to what the European Commission had originally presented.

He suggested a total of €972 billion for the seven-year period which is €80 billion less than the original Commission proposal. Van Rompuy’s proposal also constitutes an amount which is two per cent lower (€20 billion lower) than the current MFF period (2007-2013).

In this difficult context, the Government went to the MFF summit with a serious prospect of seeing Malta’s funding cut down by some 45 per cent. In practice this would mean that the €855 million in EU funding that Malta received over the past seven years should have been cut down to €480 million.

Following arduous efforts on the part of the Government, this offer has now been increased to €680 million, still leaving Malta’s share sliced by some €200 million when compared with the current budgetary period.

The Prime Minister has publicly declared that although this latest offer constitutes a step forward it still does not go far enough to meet Malta’s expectations.

Since an agreement was not reached in last month’s summit meeting, negotiations will now continue through to next year.

An early agreement is important because a great deal of work would still need to be carried out in order to translate the agreement into a comprehensive package of laws that would enable the EU programmes in different policy areas to operate within a legal framework. This legislative work must be completed in good time in order to allow the new budgetary period to kick off on time by the beginning of 2014.

Whether an early agreement can be achieved in the light of all the difficulties outlined above remains to be seen.

What is sure, however, is that in our country we have had a very good experience of EU financial assistance for the investment in our country’s infrastructure, human resources and competitiveness – all crucial elements for economic growth – and there is no doubt whatsoever that the EU budget has translated into visible and tangible benefits for us all.

We therefore have a vested interest in a deal to be reached and a good one at that. The sooner, the better.

My very best wishes for Christmas to the editor, staff and all the readers of this column.

simon.busuttil@europarl.eu

Simon Busuttil is Nationalist Party deputy leader.