Commission bids to end EU budget battle

Date: 28/10/1999

By Simon Taylor

THE European Commission is aiming to defuse a major budget dispute between MEPs and EU governments by calling for money to be moved from existing foreign policy projects to provide emergency aid for Kosovo, Turkey and East Timor.

Budget Commissioner Mich-aele Schreyer believes she can end the stand-off between the European Parliament and the Council of Ministers over the 2000 budget provided both parties are prepared to make compromises over what they see as important points of principle.

MEPs are demanding that the budget for external relations be increased by €705 million to cover new financial needs arising from the unexpected crises and fisheries problems with Morocco.

But member states are equally adamant that spending plans should respect the tight limits set by EU leaders in Berlin in March.

To bridge the gap between the two institutions, Schreyer will argue that about 60&percent; of the funds needed can be found by reallocating money from existing external relations projects when she unveils her revised budget proposals next Wednesday (3 November).

The rest of the money could come from a small increase in the overall budget for foreign affairs combined with a contribution from the flexibility reserve, an instrument created in Berlin to meet unforeseen spending needs.

More cash could also be found from the EU's €2.8-billion fund for rural development.

British Socialist MEP Terry Wynn, who chairs the Parliament's budget committee, said the Commission's proposal might be acceptable to MEPs, provided EU governments agreed to increase the overall budget.

“Parliament's view is that the flexibility reserve should not be touched. But if we are asking for a revision of the financial perspective and we have to sacrifice a small part of the reserve, it might be a deal worth talking about,” he said.

The Parliament is calling for spending on external relations projects next year to be increased to €5.292 billion, with €500 million for reconstruction in Kosovo, €125 million for the fisheries accord with Morocco, €50 million in aid for Turkey and €30 million for East Timor.

But Union governments want to keep the foreign affairs budget at €4.611 billion, arguing that the extra money can be found by cutting spending on other external relations initiatives by 10&percent; across the board.

EU diplomats say the battle is a major test of the two institutions' relative political strength.

MEPs are determined to keep the flexibility reserve, which could mount up to €600 million, for priority political projects such as job creation and training schemes. But governments argue that it was created specifically to pay for emergency programmes such as reconstruction aid to Kosovo.