EU Parliament rebuffs budget

By Joshua Chaffin in Brussels

The European Parliament wielded its new powers to reject for the first time a long-term EU budget agreed by leaders of the bloc’s 27 member states, setting the stage for a negotiation between the two sides.

The parliament’s vote was broadly anticipated, and several European diplomats expressed relief that MEPs had tempered their demands so that a compromise seemed likely.

Nonetheless, Wednesday’s ballot served as another visible demonstration of the institution’s growing clout since the 2009 Lisbon treaty dramatically expanded its powers. Before that, the parliament had little say over the budget, which will amount to €960bn over the seven-year period from 2014 to 2020.

“The European Parliament cannot accept the proposal from the member states without the fulfilment of certain essential conditions,” said Martin Schulz, the parliament president, after MEPs supported a resolution rejecting the budget by a margin of 506 to 161, with 23 abstentions.

MEPs opted not to challenge the size of the budget, which member states agreed after an all-night summit early last month that reflected the austerity gripping many national capitals. 

But they have demanded greater flexibility to shift money within headings and carry over unspent funds to future years. 

They have also requested a legally-binding review clause so that the new parliament that emerges from next year’s EU elections will have the opportunity to review the budget and possibly make changes. MEPs, for example, would like to move more money to research and development and other “future-oriented” priorities.

“These issues are of fundamental importance for the parliament,” Mr Schulz

 said. 

The EU is already running months behind schedule to draft the budget, which requires almost 70 pieces of separate legislation to authorise funding for agriculture subsidies, development projects and other EU priorities. If a final deal is not struck in the first half of the year, then those programmes could be interrupted in January.

Several diplomats and EU officials have warned that any big changes to the document would risk unravelling a complex compromise that required more than a year of negotiation.

Eamon Gilmore, the deputy prime minister of Ireland, the current holder of the EU presidency, called for negotiations with MEPs to begin “without delay” so that a deal could be reached before the end of June. “As far as I am concerned, it is full steam ahead,” Mr Gilmore said.

A senior EU diplomat said he had expected “sound and fury” but that MEPs had ultimately been “less aggressive” than anticipated – a view expressed by other diplomats.

In addition to accepting the size of the budget, MEPs also ruled out a secret ballot for future votes on the matter – removing a source of anxiety for many diplomats. 

MEPs have acknowledged in recent days that they risk a public backlash at next year’s elections if they are seen opposing the budget on purely political grounds. 

Any interruption in development payments could prove particularly painful for MEPs from the poorer countries from central and eastern Europe, which rely heavily on EU funding.

Although a compromise seems within reach, there are still several difficult issues the parties will have to resolve. 

Mr Schulz renewed MEPs’ longstanding demand that the EU has greater authority to generate its “own resources” through taxes or other means rather than relying on contributions from national governments.

He also warned that parliament would not begin negotiations until a growing pile of unpaid bills from the current long-term budget was addressed. Some MEPs have already called for a special amending budget of at least €16bn: a figure that one diplomat dismissed as “not very credible”. Copyright The Financial Times Limited 2013.