Provisional MFF agreement still to be approved

The prediction in my last post on the MFF that it would be a long midnight on Tuesday 18th June proved only too true, with the Presidency, Parliament and Commission negotiators finally reaching agreement only after more than 24 hours of talks around 8 pm last night on a compromise MFF text to forward to the Council and Parliament. The compromise agreement represents a major achievement for the Irish Presidency, but must yet be signed off by the Council and Parliament. We must now see whether the momentum will carry over to the CAP negotiations at the beginning of next week.
What has been agreed?
The full text of the agreement is not available at the time of writing. Both the Irish Presidency and Alain Lamassoure, chair of the EP Budget committee, held their cards close to their chests last night. The Presidency indicated that details of the compromise had first to be shared with the other member states. But press reports suggest the following outline agreement on the four contentious issues of flexibility, review, own resources and transparency.
The agreement on flexibility means that unused budget resources under the various MFF ceilings will no longer automatically be returned to member states but will be redirected to other MFF headings. The Council fears this will mean a significant increase in actual expenditures in the next MFF, thus running counter to the intention of the decision of the Heads of State and Government at the European Council in February 2013.
The European Commission will be obliged to present a review of the budget by the end of 2016, taking account of the economic situation and economic forecasts for Europe at that time, when the new Parliament has taken office in order that its views can be taken into account. But there is no commitment to change either the size or distribution of the budget. The Council position was that it should be left to the Commission to decide if an actual review were warranted or not.
There are also commitments on a method to carry forward the examination of an ‘own resources’ income stream for the European Union’s budget, and to increase the transparency of the budget.
Whether the agreement includes any reference to the disputed issue of unfunded liabilities in the current 2013 budget is also unclear. The Parliament’s bottom line until now has been that that the MFF cannot be agreed until the Council has agreed to the full amount in the Commission’s draft amending budget.
Implications for the Parliament

The significance of these concessions to the Parliament can only be evaluated when the actual text is available. What limits are placed on the movement of funds between MFF headings? When the Commission review takes place, will decisions on any proposed modifications be taken by unanimity in the European Council or by qualified majority voting as the Parliament wanted? Is the commitment to look at new own resources more than an agreement to further study the issue?
An important outcome is that the figures agreed by the European Council, including those for the CAP, have not been altered. Thus, while the Parliament may have gained concessions on some structural issues of budget management (important in their own right), it has not had any influence on the level or composition of spending.
This outcome is similar to the negotiation of the 2007-2013 MFF under the pre-Lisbon Treaty consultation procedure (under which the European Parliament had a similar veto power). The Commission made its initial proposal in February 2004, and the European Council reached agreement following difficult talks in December 2005. This agreement was rejected by the European Parliament in an overwhelming vote (only 76 MEPs supported the Council position) in January 2006.
However, the Parliament accepted a very slightly revised proposal in May 2006. The overall budget was increased by just €2 billion to a total of €864 billion, or an increase of 0.23 percent compared to the European Council agreement. It is clear that the Parliament’s bargaining strength is severely limited by the sequencing of the negotiations. Once the European Council has painstakingly reached an agreement, it is very difficult for the Parliament to re-open the package. Timing also acts against the influence of the Parliament because of the huge political pressures to conclude an agreement to allow for the adoption of the individual spending programmes.
Next steps

The compromise agreement reached last night now needs to get the backing of both the Council and the Parliament. The Council will decide its position at the General Affairs Council on Tuesday next 25th June. One assumes that the Presidency has kept the member states on side through regular briefings but unanimity will be required among all the member states. While the Presidency is confident it can gain approval, all of the issues have been controversial for at least some member states.
The Parliament’s initial reaction has been more reserved. It was significant that the compromise agreement was announced to the press by the Presidency alone without the participation of the Parliament’s representatives. Alain Lamassoure stated that because of reservations held by some members of the EP team he was not able to commit to the Parliament’s approval (see report). While he is reasonably confident of support from his own political group, the EPP, he was less confident of the positions of the other groups. Members of the Socialist group have already said they are dissatisfied with the compromise. The Parliament will decide at a meeting convened by the EP President Martin Schultz also on Tuesday next whether to proceed to a plenary vote at its next plenary meeting in July. Update 20 June: Read here the statement by Reimer Böge accompanying his resignation as EP rapporteur for the MFF negotiations.
Expect to see a lot of huffing and puffing and venting of anger in public over the next couple of weeks before the plenary approves the compromise in July.
Photo credit Investment Insider

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