Tuesday 18 June – high noon (or long midnight) for an MFF agreement?

I previously posted updates on the state of play in the MFF negotiations on 29 April and 15 May last. At the end of April, the General Affairs Council had just agreed the ‘political guidance’ for the Irish Presidency to start discussions with the Parliament’s negotiating team. However, the Parliament had refused to attend the first proposed trilogue meeting with the Presidency and Commission because of the Council’s unwillingness to commit to meet the anticipated gap in payment appropriations in the EU’s 2013 budget.
A trilateral meeting of Presidents was held on May 6 which broke this deadlock (see my 15 May post for details). The first trilogue meeting took place on May 13 but dealt largely with procedural issues. Since then, the trilogue discussions have continued with a number of additional meetings scheduled, most recently on Monday 10 June.
That meeting failed to reach agreement although a number of the participants have tried to talk up the momentum (see the Irish Presidency press release as well as Budget Commissioner Lewanowski’s press release) following the meeting. Further technical meetings between the groups to clarify the Presidency’s latest offer are taking place next week, with a further trilogue scheduled for Tuesday evening next. This is the last scheduled opportunity to reach a political agreement on the MFF regulation under the Irish Presidency, as the final General Affairs Council of the Presidency takes place on 25 June (at a pinch, if enough progress is made next Tuesday there could still just be time for a further meeting to conclude a deal).
The Commission Press Service released on 11 June a very useful summary of the issues at stake in the MFF trilogue negotiations. Further background information is available on the Council’s MFF website. The revised list of expenditure ceilings by programme following the European Council February 2013 conclusions as circulated by the Commission can be found here.
The trilogue process
Formally, the trilogue discussions seek to agree on the text of the MFF Regulation and the Inter-Institutional Agreement on budgetary discipline and sound financial management of the MFF. Immediately after the delayed opening of the trilogue process on 13 May, the Presidency circulated a note for the General Affairs Council on 21 May setting out the state of play and summarising the Council’s position on the issues at stake. In this note, it sought clarification of the political guidance for its stance in the negotiations on the four issues of a review clause, budget flexibility, own resources and unity of budget.
The Council’s position at its 21 May meeting as summarised in the subsequent press release noted that:

…delegations were ready to examine a legally binding obligation on the Commission to present a review in 2017, provided that the unanimity requirement for the Council vote on the MFF regulation was respected and pre-allocated envelopes were preserved. On own resources, delegations showed readiness to consider a declaration setting out a political roadmap for work on the future. As far as the unity of the budget is concerned, delegations expressed some openness to having a Commission document annexed to the annual draft budget setting out all expenditures covered by the EU budget. Concerning flexibility, many delegations could consider further discussing the possibility to the carry-over from one year to another of unused margins under the payments ceilings and a frontloading of certain expenditures, such as for the new youth employment initiative.

The Parliament’s Budget Committee meeting on 16 May was not too happy with the Econfin Council’s decision on 14 May to approve part payment of the Commission’s draft amending budget for 2013. It reiterated the Parliament’s view that the issue of the additional funds needed to pay outstanding bills of €11.2 billion must be resolved before concluding the MFF negotiations. However, it supported the continued involvement of the Parliament in the trilogue process.
The Budget Committee chair, Alain Lamassoure, noted that the Parliament had every intention of re-opening discussion of the actual figures in the European Council’s MFF conclusions. This suggestion was rapidly shot down by Eamon Gilmore, for the Irish Presidency, following the GAC meeting on 21 May when he argued that it was too late now for the Parliament to be introducing new elements into the talks.
The Parliament’s negotiating team issued a press release just prior to last Monday’s trilogue session noting that “Based on the most recent texts provided by the Council, MEPs fail to see how an agreement could be reached in this evening’s tripartite meeting with the Irish Presidency and the Commission”.
Subsequently, Alain Lamassoure gave a press conference on the following day (view live) in which he accepted the Irish Presidency view that there was some momentum in the talks but described the pace as more like a tortoise than a rabbit, and he reiterated some of the Parliament’s bottom lines. Nonetheless, he sounded more like someone in negotiating mode than someone who was ready to pull the plug on these talks at this stage.
Commission President Barroso added his support yesterday to the Parliament’s demands especially regarding flexibility when he addressed the Parliament on the run-up to the European Council summit on 27-28 June.
Today, a European Parliament group leaders’ press release expressed their disappointment at the Council’s reluctance to compromise. The statement recalled that

    without a convincing guarantee from the Council to agree on budgeting the full additional amount of €11.2 billion requested by the European Commission in its Draft Amending Budget no.2 to enable payment of the Union’s bills for the current year,
    without true flexibility for commitments and payments across headings and across years to allow the use of the full amounts foreseen for 2014 to 2020,
    without an obligatory revision clause making it possible to reassess the budgetary needs during the MFF period and adjust them, if necessary, allowing the newly elected European Parliament to play its role, and
    without a clear understanding on a viable way and timetable for the setting up of a true system of own resources for the European Union,

the necessary majority in Parliament to consent to the next MFF will not be achieved.

Although there are still siren voices which argue that the EU would be better off without an MFF agreement at this stage and calling for new talks after a new Commission and Parliament is elected in October of next year, the longer the delay, the more problems emerge. The latest concerns the adoption of the EU’s budget for 2014 which should be the first year of the new MFF.
The Commission is obliged by the EU’s treaty to submit a draft budget for the following year by 1 July, but has not yet done so. The problem is whether the 2014 budget should reflect the proposed MFF figures in the European Council conclusions, any revised political agreement between the Council and the Parliament, or be based on a continuation of 2013 ceilings if there is a failure to agree the MFF. The Commission appears reluctant to take sides before the Council and the Parliament have resolved their differences.
After next Tuesday we may know which of these options becomes the default one.
Photo credit TRG International

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