As negotiations on the next EU Budget are entering the final lap, Brussels is piling pressure on member states to reach some form of agreement in time for next May’s MEP elections. The Times of Malta was recently invited for a media seminar on the matter. 

Failure to reach agreement on the EU Budget before the May 2019 European elections would play into the hands of populists and jeopardise the bloc’s unity, according to Budget Commissioner Gunther Oettinger. The scenario could be even worse should there be no deal on the UK’s departure from the bloc, he believes.  

“An EU Budget agreement would be a sign that Europe is still standing together. There is much more at stake here than a mathematical exercise, as there are European elections ahead,” he said.

Mr Oettinger sounded this warning last week when addressing a conference in Brussels ahead of the forthcoming European Parliament debate in Strasbourg and, more importantly, the December summit.

Known as the Multiannual Financial Framework, the next EU Budget will cover the seven-year period between 2021 and 2027. 

Last May, the European Commission presented its proposals, which for some member states, including Malta, resulted in aggressive cuts of up to 24 per cent where it hurts most – cohesion funds. These comprise the co-financing of capital projects like roads.

In Malta’s case, the proposed budget will result in €179 million less funds, with the total cohesion funds allocation going down to €597 million. The reduction is both the result of a new mechanism to distribute funds and the effect of robust economic growth, which means there is less justification to tap funds to bridge the disparity between the quality of life on the island and the EU average. 

While Maltese diplomats in Brussels were tight-lipped when approached by this newspaper, a senior commission official dismissed the idea of Malta becoming a net contributor.

This budget could be an anchor of stability for the next 10 years

“I do not understand why the Maltese should be worried on the matter as that would mean reaching Sweden in economic terms, which is a prosperous country,” he remarked.

From a wider perspective, the overall EU Budget for the 27, excluding Britain, will be of €1,279.4 billion. The value could differ but no drastic changes are to be expected.

One of the major sticking points, is a proposal to link funding with the rule of law, to the point that this could be suspended. For such thing to happen, the commission must first make a proposal, which must be adopted by the EU Council. 

Needless to say, countries like Hungary and Poland, which have been at loggerheads with Brussels over human rights issues and migration, are not very keen on the matter.

While acknowledging that the situation on Brexit is very volatile, commission officials, who spoke to the Times of Malta on condition of anonymity, were more upbeat on the progress registered so far when it comes to the budget.

One of them even insisted that talks on the next budget were proceeding at “break-neck speed”. In this respect they sounded very optimistic that come next May, a framework agreement would be reached by the 27 member states.

Though these talks are very complex in nature, the biggest stumbling block is to agree on the “ceiling” levels in six major policy areas, excluding the administrative expense of EU institutions themselves. Once these values are established, the commission can start working on the details.

While the UK is taking no part in these talks, a no deal on Brexit would send economic shockwaves across the EU. Such scenario would on one hand mean the abrupt termination of EU funds to Britain as from March 29 next year, but it would also mean a shortfall in the existing EU budget as Britain would no longer honour its financial commitments. Consequently, an agreement on Brexit would ensure a smoother transition for both sides.   

For Mr Oettinger “a no deal would cause huge damage not just for the UK but for the entire European project”.

For this reason Brussels is piling pressure on member states to reach a framework agreement by next spring or risk facing a backlash which could result in far-right and Eurosceptic parties making further inroads.

“This budget could be an anchor of stability for the next 10 years,” the commissioner is warning.  

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