Budget wrangling draws to end

Date: 07/12/1995

By Rory Watson

FORMAL approval for EU expenditure of some 86.5 billion ecu in 1996 will be given next week, although legal and financial question marks still hang over the annual budget.

After ironing out many differences with EU governments over individual spending plans, the European Parliament is set to complete the lengthy budgetary procedure in Strasbourg on 13 December.

But it will do so as the Dutch government is still struggling to ratify the increase in the EU's budgetary resources agreed at the Edinburgh summit in December 1992.

MEPs will also be digesting a ruling from the European Court of Justice (ECJ) expected today (7 December) on the legality of the 1995 budget, after EU governments complained that the Parliament had overstepped its powers on farm spending.

The Netherlands is the only country which has failed to implement the Edinburgh decision, which would progressively increase the size of the EU budget from 1.2&percent; of the EU's Gross National Product in 1994 to 1.27&percent; in 1999, and there is now no possibility of the agreement being ratified this year.

The country's lower house is due to vote on the increase on 19 December, while the upper house will not do so until well into the New Year. The delay will force the European Commission to make technical adjustments to keep the budget within its legal financial ceiling for the first few months of 1996, until the GNP increase is ratified.

The delay has been partly prompted by the growing concern in the Netherlands that the country is now the largest per capita net contributor to the EU budget. It is also a reaction to Italian tactics of blocking its own ratification of the GNP increase until it had secured a hefty reduction in the fines it faced for breaking EU milk quotas.

“We are the largest per capita payers and there is growing irritation that the UK and Germany have compensatory mechanisms, while we have none. We are also bearing the full burden of scoring badly on agricultural and structural funds,” explains a Dutch spokesman.

MEPs and member state governments, who share EU budgetary powers, will also need to decide next week what action to take on the 1995 budget in the light of the ECJ's ruling on it.

If the judges follow the advocate-general's advice, they will rule in favour of governments and declare the 1995 budget invalid.

Despite the two uncertainties, there has been a greater meeting of minds between MEPs and governments this year than in the past. The one major outstanding point of difference centres on EU aid to the Mediterranean. Governments are determined to implement the Cannes summit decision by allocating 900 million ecu next year, while MEPs argue that amount cannot be spent and are expected to lower it to 700 million ecu.

An accounting device, however, will leave the door open for the final 200 million ecu to be available, if necessary, in 1996, allowing both sides to save face.

“With the Spanish EU presidency's emphasis on the Mediterranean after the Euro-Med conference and with the Intergovernmental Conference coming along, no one wants this to become a battleground,” explains one senior official.

But on two other areas of importance to governments - aid to Central and Eastern Europe and support for Trans-European Networks - MEPs are likely to stick to their guns and cut back proposed funding in order to release cash for other priority projects.

British Conservative MEP James Elles, the Parliament's 1996 budget rapporteur, believes this year's process has shown how MEPs are now focusing on value for money in EU spending and using their powers to set certain policy priorities.

“This year's budget confirms this is a responsible Parliament, a reforming Parliament and an innovative Parliament,” he said.

He argues that the Parliament this year has succeeded in convincing governments and the European Commission to introduce greater financial management into the operations of the dozen or so agencies which carry out specialised work for the Union.

Next week, Elles will also present a list of 10 innovations he believes MEPs have introduced through this year's budget. They include funds for relatively small projects such as a European voluntary service, a European youth opera, the clearance of land-mines and for larger schemes for job creation, the reconstruction of Sarajevo and a citizens' information campaign.

One of the Parliament's favourite budgetary tactics to influence policy change is to freeze finance in a reserve fund and only release it when the necessary changes and improvements have been made. Currently some 80 separate budget spending lines have reserve funds. EU governments dislike the threat to turn off the financial tap and MEPs and senior officials have now agreed to examine whether certain criteria must be met before the tactic is used.