RIGA - European Union leaders agreed on Feb. 8 the first ever cutback in the bloc’s budget after marathon all-night talks driven by sharp differences over priorities for the next seven years, reports AFP.
“Deal done!” summit chair and EU President Herman Van Rompuy said on Twitter after more than 24 hours of tough talks between the bloc’s 27 heads of state and government. “There’s a lot in it for everybody,” he said shortly after, adding that the 2014-2020 austerity budget embodied “a sense of collective responsibility from European leaders.”
The budget agrees to spending of close to 960 billion euros, or one percent of the EU’s gross national product, for the next seven years (2014-2020).
Commenting on Latvian Agriculture Minister Laimdota Straujuma’s statement that the Baltic countries were not united in the talks on the European Union’s multi-annual budget, which concluded on Feb. 8, Latvian Prime Minister Valdis Dombrovskis explained that this concerned only the final stage of the talks, reports LETA.
“It is the Baltic countries’ unity over the past twelve months that achieved the increase in direct payments to farmers, to 196 euros per hectare,” Dombrovskis stressed to reporters on Feb. 11. “It was just the last few hours when Latvia was the last one to continue the battle. But we had been working on these matters for an entire year before that,” said Dombrovskis.
Estonia and Latvia dropped out because the offer was similar for all three countries, while Estonia and Lithuania had better starting positions, said Dombrovskis. He added that it was Latvia that achieved that farmers receive 127 euros per hectare from next year, not the originally-planned 109 euros per hectare.
What did Latvia get?
Within the framework of the European Union’s next multi-annual budget, Latvia will be able to use up to 4.9 billion euros for cohesion policy needs, Dombrovskis said during the Saeima European Affairs Committee’s session on Feb. 13.
Back in 2011, the European Commission offered Latvia 4.08 billion euros. However, Latvia has achieved 4.23 billion euros in cohesion policy funding during the bloc’s budget talks. The country will also receive an extra 80 million euros to reduce youth unemployment. CEF transport projects will have available 600 million euros. Thus, according to 2011 prices, Latvia will have access to a total of 4.9 billion euros (in current prices this is 5.5 billion euros).
According to the prime minister, Latvia will be allotted 707 million euros more from the EU budget despite the budget cuts approved by the European Council.
Foreign Minister Edgars Rinkevics denied that Latvia, Lithuania and Estonia were not united during last week’s EU budget talks. The minister emphasized that the Baltics had a unified position in discussions on cohesion financing and the Connecting Europe Facility (CEF). Furthermore, Baltic leaders came together for a final meeting on Feb. 7 to coordinate their positions.
Rinkevics pointed out that the comments made by some European Parliament members, who have no idea of the true circumstances of the budget talks, should not really be taken into account. He said that Latvia was successful in obtaining an exception in cohesion financing from the EU budget. He said that Latvia will have funds available outside of cohesion funding from the CEF, which will give Latvia the opportunity to develop its rail infrastructure. At the same time, Latvia and Lithuania will be able to obtain additional financing to construct a gas link with Poland.
Thanks to Dombrovskis, the European Union’s multi-annual budget proposal for Latvia is what it is now, even though it could have been much worse, European Parliament member Krisjanis Karins said in an interview on Rietumu Radio on Feb. 11. Karins emphasized that the prime minister is the one who achieved the extra 67 million euros for rural development needs in the final proposal.
Commenting on the opposition’s reproaches addressed to the prime minister for “not defending Latvia’s interests well enough at the European Council’s meeting,” Karins said that Dombrovskis “has done more than any other individual in this regard.”
Lithuania’s take-home share
The Feb. 8 agreement by European leaders on the next multi-annual EU budget shows that Lithuania managed to negotiate an increase of four billion litas (1.15 billion euros) in its financial package compared to the 2007-2013 framework. The overall level of EU financial support for Lithuania will increase by almost 10 percent, amounting to a total of 44.5 billion litas.
After the talks, President Dalia Grybauskaite underlined that given such difficult conditions in Europe, the best possible result had been achieved for all member states. “Taking into account the cuts in the overall EU budget and the difficulties faced by Europe, it is the best possible result that Lithuania might have expected. More than 44 billion litas, for a seven year period is a huge injection into the Lithuanian economy, which offers new possibilities to the people of our country,” the president said.
Support to the agricultural sector - for rural development and direct payments - will amount to 17.2 billion litas. Direct payments to Lithuanian farmers will go up by 70 percent, reaching 196 euros per hectare by 2020.
Lithuania has also succeeded in not having the financing terms for decommissioning the Ignalina nuclear power plant restricted. The closure of Ignalina will be funded as provided for in Lithuania’s Accession Treaty. In current prices, 1.5 billion litas are allocated for Ignalina’s decommissioning in 2014-2020, and 1.03 billion litas of decommitted funds are carried over from the present financial period. In all, 750 million euruos will be available to Lithuania for decommissioning work over the next seven years.
The multi-annual EU budget also allocates 29 billion euros for ‘connecting Europe’ - the Connecting Europe Facility to finance energy, transport and telecommunications projects. For Lithuania, this is the possibility to receive funding for key energy projects: electricity and gas interconnections.
Clear winners in Estonia
Estonia’s share in the new budgetary framework is 5.89 billion euros, nearly 907 million euros more than it was in the 2007-2013 budget, which makes the country one of the greatest net beneficiaries among the member states. “In spite of the contraction of the total budget volume, Estonia can consider itself a clear winner in these talks,” said Prime Minister Andrus Ansip after the talks.
“Although we did not succeed in eliminating the inequality completely, farmers have reason to cheer,” said Ansip. The total direct subsidies amount will double and the support per hectare will reach 75 percent of the EU average by the end of the period. Ansip said that will mean at least 196 euros per hectare by 2020. Currently the assistance, including top-ups from the state budget, is 143 euros per hectare.
A total of 23 billion euros was left in the Connecting Europe Facility, of which ten billion euros is for Cohesion Policy states. That means that the Rail Baltic project, the 730-kilometer-long rail line that would link Tallinn with Poland and Germany via Latvia and Lithuania, can go ahead. Prime Minister Ansip said the future Estonia will cease to be an island in the energy or logistics sense. “Thanks to today’s agreement, Rail Baltic is no longer just a theoretical dream but a real possibility,” said Ansip.
Estonian Riigikogu foreign committee chairman Marko Mihkelson wrote in his blog that Estonia can be satisfied with the new European Union budget, but the budget as a whole focuses on the present and doesn’t support the increase of competitiveness of the continent, reports Postimees Online.
“Still, I have to note that the deepening future debate in the European Union is not at all reflected in the budgetary priorities. Again, member states are on defensive positions, for understandable reasons. Special interests of member states are in the foreground, general European interests in the background,” he wrote. “Thus it is still possible that the European Union focuses on agriculture and not, for example, on research and development activities.”
Mihkelson noted also that the EU budgetary period should be less than 7 years, which is too long in today’s fast changing world, stating that “Maybe that is one of the reasons why Europe has especially in the past decade lost dynamics and reaction ability towards what is happening in the world.”
One more hurdle
Pushed by British Prime Minister David Cameron, who said the EU could not increase spending in times of austerity, leaders agreed a cut of around three percent compared with the 2007-13 budget.
“Every previous time these multi-year deals have been agreed, spending has gone up. Not this time,” Cameron said, adding that it also “shows that working with allies, it is possible to take real steps towards reform in the European Union.”
Significantly, the EU’s farm support program, of which France is a major beneficiary, and Cohesion Funds, used to help new member states catch up with their peers, were not cut further from figures Van Rompuy submitted to a failed summit in November.
Under the accord, 2014-20 actual spending, or “payments” in EU jargon, is set at 908.4 billion euros, with an absolute ceiling of 960 billion euros for spending “commitments” to the budget. That represents a three percent cut from the 2007-13 budget.
In the EU budget process, commitments refer to the maximum amount that can be allocated to programs, while actual spending or “payments” is usually lower because projects are sometimes delayed or dropped.
The final agreement, however, is only part of the battle as there is another important hurdle to clear - the European Parliament must approve the budget, and lawmakers are in no mood for austerity.
The heads of the four largest groups in Parliament, which is to vote on the budget in July, said they could not accept it in its current form as it would not help boost the struggling EU economy. “The real negotiations will start now with the European Parliament. We will maintain our priorities which we have clearly stated many times,” they added.