Just in it for the money?

Date: 09/10/1997

NOTHING concentrates the mind like money. Traditionally, in the Union, pecuniary concerns are at their strongest in the autumn as attention turns to the following year's spending levels. But given the girdle of a single currency, cost-consciousness is ever-present these days.

As the two EU institutions with the greatest control over the Union's purse-strings - the Council of Ministers and the European Parliament - resume their budgetary jousting this month over 1998 expenditure, more and more strands are becoming entwined in the debate.

The most prominent is enlargement. The likelihood of any member government being prepared to hand over increased national funds to the Union budget is virtually nil. So the European Commission is merely acknowledging political realities when it suggests retaining the present ceiling of 1.27&percent; of gross domestic product.

However, it is on less firm ground when it recommends extending this limit right up to 2006. The Commission argues that this lengthy period is necessary to provide the budgetary security which enlargement requires without opening a painful debate on finance just as new members join.

That argument is, understandably, being challenged by MEPs. They complain it would unnecessarily tie the Union's budgetary hands at a time when there are so many unknowns ahead.

A more prudent approach would be to reduce the extension period to, say, three years and to introduce a specific clause allowing for a review if current scenarios prove inaccurate. It would also make sense for any left-over money at the end of a budgetary year to go into a special enlargement fund instead of being returned to member states as at present.

Another strand in the debate brings disturbing echoes of the early Eighties. Several governments are openly comparing what they pay into and what they receive from the Union in strict cash terms.

Germany, backed by the Netherlands, is taking the lead in muttering darkly that the present arrangements are unjust, and there is a certain sympathy for the argument that it should no longer have to pay almost 30&percent; of the Union's gross budgetary contributions.

But former UK Prime Minister Margaret Thatcher demonstrated what happens when EU membership is distilled down to a simple question of money. For five years, her stance led to bitter disagreements and policy paralysis. A rerun of such arguments could derail longer-term Union policies of far greater strategic importance.

Furthermore, are the import levies collected on the EU's behalf in Rotterdam solely Dutch contributions to the budget? If a German company has a contract at Athens airport for a job largely financed by the EU's regional fund, who is really benefiting?

If the argument is to be joined over the impact of Union membership on individual countries' net payments and receipts - as now appears inescapable - then honest answers to such questions will be essential.