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Friday, February 08, 2013

EU budget talks: The dust has settled - and they all won!

We've been listening to the national press briefings of several EU leaders following the deal on the EU budget (which we analyse here). And you got it - they all won! (well, almost). Here goes:

David Cameron (UK)

  • The British Prime Minister said, "I think the British public can be proud that we have cut the seven-year credit card limit for the European Union for the first time ever." 
  • He went on, "The only way you can best protect the British taxpayer is to keep overall spending down, and that’s what we’ve done, and also to keep what remains of the rebate, and it is completely untouched." 
  • On the possibility of MEPs staging a secret ballot vote on the next long-term EU budget, Cameron said, "Of course the European Parliament has a role, and we should respect that. But I don't really understand secret ballots. Parliaments and votes should be open, should be transparent, people should be accountable for how they cast their votes."
Angela Merkel (Germany)
  • As usual, the German Chancellor - the power-broker - did not give away too much during her presser. She said, "The effort was worth it…in my view this agreement is good and important." 
  • She also warned that "the negotiations with the European Parliament won't be easy".
François Hollande (France)
  • The French President, a bit sulky, said this was "the best deal" on offer given the circumstances.
  • He repeatedly stressed that the UK wanted payment appropriations to be lower than €900bn over seven years, while France was insisting on €913bn (see here if you are not familiar with the commitments vs payments distinction). According to Hollande, given that the final compromise was reached at €908.4bn, "Everyone will say who made the bigger step" - a way to suggest that David Cameron had given up more than he did.
  • According to Hollande, France will also save some €140m a year on its financing of the various rebates. On the rebates, the French President made his most interesting remark (see here, around 16:00 in). He said, "I knew that there was no possibility to put into question the British rebate, because you know that it is provided for by the [EU] Treaties [which, by the way, is incorrect]. Therefore, it is immutable" at least until the Treaties are re-opened for negotiations. The British, he added, "should keep this in mind, including when they demand treaty changes." If this is not a threat, then what is?  
  • He said that funding for agriculture has gone down overall, but he has made sure that aid to French farmers will remain at the same levels as in 2007-2013. Now, that's what you call 'solidarité', right?
  • Finally, the French President admitted that the UK was not on its own in these negotiations, as "other countries wanted more for themselves and less for Europe".  
Mario Monti (Italy)
  • The (caretaker) Italian Prime Minister hailed a "particularly significant improvement" in Italy's net position compared to other big net contributors to the EU budget.
  • He said Italy has secured an extra €3.5bn in funding compared to the compromise proposal on the table at the November summit.
  • Furthermore, Italy will save around €600m a year on its financing of the various rebates.
Mariano Rajoy (Spain)
  • The Spanish Prime Minister said the deal is "very good for Spain". Contrary to expectations, Spain will remain a net recipient from the EU budget over 2014-2020 - which is huge. 
  • Rajoy was particularly pleased by the fact that Spain "will get almost 30%" of the new fund for youth unemployment included in the next long-term EU budget. 
Mark Rutte (Netherlands)
  • The Dutch Prime Minister opted for a lower profile. He said, "Of course you never completely get it your way with 27 member states, but I think that we as the Netherlands can be satisfied." 
  • He described the deal as a "sober" budget, and said that the Netherlands "worked well together" with Sweden, Germany, Denmark, and the UK.  
Helle Thorning-Schmidt (Denmark)
  • The Danish Prime Minister said her country "came here with three priorities, and we satisfied all of them", pointing out that she had secured an annual rebate of €130m.
Fredrik Reinfeldt (Sweden)
  • The Swedish Prime Minister said the deal was "a surprisingly good result".
  • He argued that, contrary to fears that Sweden's contribution to the EU budget would increase, it is, in fact, set to drop slightly.
Donald Tusk (Poland)
  • The Polish Prime Minister spoke of "a huge success" for his country, stressing that Poland's receipts will increase by €4bn despite the long-term EU budget facing a €38bn cut from the previous seven-year period.
  • He went even further, claiming today was "one of the happiest days of my life". Wow!
Werner Faymann (Austria)
  • The Austrian Chancellor was less enthusiastic than many of his counterparts. He said the deal struck this afternoon is "presentable" for Austria - which managed to secure a rebate, although it will be phased out by 2016 (see the final deal here).
Petr Necas (Czech Republic)
  • The Czech Prime Minister was pleased about his choice to threaten a veto. He said, "If the Czech Republic had not seriously threatened to block the negotiations, then it would not have been possible to negotiate a better outcome."


DeeDee99 said...

The EU Budget is being cut by a miniscule amount.

The UK will pay a higher contribution.

And we're supposed to be impressed!

Anonymous said...

You are supposed to leave and stop whining.

Nobody out of 27 (soon 28) is 100% happy, but all others see the pros. You only complain.

Just go.

Jonas said...

Yeah, just go. The UK has wanted and gotten special treatment ever since the beginning, and the rest of us is getting sick of it.

Average Englishman said...

Well said Anonymous and Jonas. The sooner the UK leaves this undemocratic money pit the better.

Rollo said...

Anonymous and Jonas are dead right; we should go; and quick. We cannot expect any gratitude form the people we have been subsidising all these years; let's not waste another penny on them.

Rollo said...

We can expect every 'leader' to be flying home waving a bit of paper and claiming 'peace in our time'

Ray said...

To all those criticising the UK's position on European membership, we thank you. Hopefully we can meet your wishes as soon as possible. Be assured that in the not so distant future when the cloak drops from this fascist creation and you find yourself back in the fifties with a Franco/Salazar type government, we will hope to be able to come to your aid again. as we and our friends have done so many times before.

Bugsy said...

@Jonas and Anonymous - I wonder whether the populations of the PIIGS and Cyprus are as enthusiastic about the UK exit as you are. One of the net contributors leaving, who will make up the loss of income for them?

Jonas said...

The problem is that if you keep seeing the EU as a zero-sum game, you will never be happy, because you will always be a net contributor. However, it's not a zero sum game; everyone profits when you coöperate (everyone profits from, e.g., the common market, educational coöperation and exchanges, enviromental protection). As your business leaders seem to be able to see, since they overwhelmingly want to stay in the EU.

There are many things wrong with the EU. However, instead of taking a constructive approach, Britain's style of negotiating has always been with the knife on the table, threatening with vetos and with a lot of anti-European rhetoric. That may be smart in the short run, but in the long run your partners will wonder whether you're interested in the greater good at all. Repeated negotiations is not just about "winning", it's also about establishing trust.

As for the UK's contribution, well obviously it will be somewhat of a loss. However, with a EU of 26 members, the net contribution of the UK as calculated by the Bundesbank works out to somewhere in the region of 0,02-0,05% of total EU GDP (excluding the UK, and depending on how you calculate 'net contribution'). It's still somewhat of a loss in a time of recession, but it obviously won't ruin anyone either.

I sincerely think what would be best for everyone if the UK would just leave the EU and join the EEA, since it never has really seemed to really been able to make up its mind whether it wants to be in or not and to what extent. You can only expect to use the leverage of an Eurosceptic public so long before everyone gets tired of it.

Rollo said...

The EU is a sinking ship. The rats that leave the sinking ship are the clever ones: the ones that dont go down with it. This Jonas is living in a fool's world. It is not a zero sum game, it is negative for everybody. Tell the 54% unemployed Spanish and Greek youth what a lot of benefit they are getting. This Jonas has swallowed the propaganda from the EU, which has swallowed him. Perhaps in a while, he will see the light again.

Average Englishman said...


We agree on many things again, especially your conclusion that it would be better for the UK to leave the EU sooner rather than later and join a free trade organization. I also welcome your thoughtful approach and it is for this reason that I would like to explain a few things about the UK's position.

The majority of the UK's people never wanted to be part of a United States of Europe and still don't. They were lied to by their politicians who said they were signing up for a 'common market' trade arrangement only (I voted for this too by the way).

Yes, the UK people do not like throwing money at European bureaucrats for them to waste on Mercedes and flashy offices, or inefficient farmers etc., etc., especially when that money is needed at home. For example, I went to Poland recently and saw a nice new motorway being built right across the country with EU cash but I queue every morning in a traffic jam waiting for a bypass to be constructed that should have been built many years ago but apparently, there are no funds available. Also, do not confuse a lot of noise from the likes of Richard Bransin with what most business people in the UK think; that is, the majority of small business owners like yours truly; most of us want out in a big way.

However, the money is just annoying and not the main problem, which is the undemocratic nature of the EU.

You may be happy to have unelected bureaucrats telling you how to run your affairs but I am not. I didn't sign up for European fat cat presidents telling me from Brussels how I should run my business, my affairs and my life in general. Ask an Englishman nicely for something and he'll give you the shirt off his back; tell him what to do and you'd better watch out. This is nothing new; we don't like being pushed around here. Sadly, sooner or later if the EU keeps going as it is there will be a Fourth Reich or something similarly nasty and I want no part of it. If you think I'm being overdramatic ask a few of the under 25 year olds in Greece and Spain without jobs (over 50%).

You may want your EU superstate because you believe it offers you something better than you have enjoyed in the past (who can blame the Fernch, Germans and Poles to name but three) but most people in the UK do not want to be a part of it. We wish you well with your project and hope that it comes out better than we expect but we are an independent country and wish to remain so.

Regarding the various areas of cooperation you mention, the UK will not pull ap a drawbridge when we leave the EU and will continue to join with our neighbours to agree upon the environmental matters etc., that you mention but without some unelected official telling us what to do. One of my children is going to uni in Australia for a year and another is considering the States and how was that possible I wonder without the EU holding their hands? Such nonsense, the UK has been heavily involved in World affairs for hundreds of years and wil continue to do so; as well as being mainland Europe's biggest customer but we are not children who need a big daddy in Brussels to order our affairs.

I hope that clarifies a few things, which were expounded in the hope of improving cross channel understanding a little. As for your desire to kick us out of the EU? Keep up the good work!

Jonas said...

A lot of assumptions about my positions here. Actually, I think Cameron's ideas about clearly defining Europe and making clear what powers it should have and what not, makes a lot of sense. It's just that I don't really like the UK's style of negotiating, which is hardly constructive.

I actually find many things about the EU problematic; yes, CAP and the democratic deficit and all that. Britain actually has many allies in Europe, but it risks alienating them.

As for Spain's and Greece's problems: well, obviously the euro (as is) was a terrible idea. If Spain still had its own currency, it could have just devaluated it and suffer a (relatively) mild recession. So yes, Margaret Thatcher got that one right. Otherwise, Spain and Greece have profited immensely from EU membership. Not just from regional stimulus and CAP, but also from access to the common market and institutional and democratic reform.

It's rather ironic that some of you keep referring to autocratic governments such as those of Franco and Salazar, since the prospect of EC membership played a significant role in democratic reform in these countries (and those of later applicants).

As for talk of bureaucracy, waste, red tape and so on, well obviously there is some. But is it really more than at lower levels of government? Scale advantages make up for a lot. To take the example of education again: how efficient do you think it is for every country to have bilateral agreements about everything, wildly different standards about diplomas, different procedures for each country etc. As it is now, it's vastly cheaper and easier than ever to study abroad, for all parties involved (students, universities and governments). If that wasn't a problem in the past, why has studying abroad seen such explosive growth?

It's easy to say that you'll work with the EU concerning environmental protection. But without the supragovernmental aspects of the EU, there very likely would have never been these strict standards in the first place (concerning for example, fuel emissions). Without common interests to keep everyone focused on the greater good, self-interest would have prevailed, just as it does in global negotiations (Kyoto Protocol).

Anyway, leaving the EU won't actually free you from many of the regulations if you want to export, trade or invest in the EU (half of UK's export). You just won't have to say anything about it.

Rik said...

The EU doesnot become democratic in any other way. Or reorganise itself on other issues.
Do you really believe the budget would have been cut and the discussion over which powers should be where would be open if Cameron had taken any other approach? He did more in that respect with the knife on the table than the rest of Europe including the EU leadership is several decades. Cameron is not unconstructive the other side simply ignores and has been ignoring all sorts of signs that the general public has problems with it.

And again it is as much the EUs mistake it ran out of hand as it is Cameron's, likely even more.
It is clear the platform in many countries, not only the UK is lacking for a lot of things and still it is pushed through (and not by Cameron). In my eyes THE way to run the whole show one time into the wall, like now has happened in the UK.
The EU comes up with a proper deal, or they likley will be sent packing. 15-20% of the electorate looks to support this plan and moved from basically negative to give it a chance.
Ignore them at EU level and they move most likely back to the outs and likley permanently.

And imho you will see similar things most likely in many other countries as well, caused by transfers, failed policies, austerity. Whatever it might be, but this will not keep going this way forever. And likley at the most unconvenient moment, I would like to add.

Jesper said...

The payers and beneficiaries are happy with the deal. The administrators of the deal, EU-institutions, are unhappy and threaten to veto the agreement. Looks like a big problem to me and the problem is clearly with the ones who threaten to veto an agreement that is acceptable to both payers and beneficiaries.

"I actually find many things about the EU problematic; yes, CAP and the democratic deficit and all that."

I'm not sure if the above comment was intended to trivialise two very important issues.
CAP is a significant part of what EU-institutions do and should not be treated as one small item among many.
Democratic deficit cannot be accepted be accepted by democrats. But good to see the admission that there is in fact a democratic deficit.

The ones who believe that EU-institutions would voluntarily reform might have forgotten that they would by doing so lose perks and jobs. Such incentives rarely make for quick work.

People waiting for institutions to reform themselves without putting pressure on the institutions to reform will be waiting for a very very long time. The countries that are, together with the UK, putting pressure on EU institutions to reform have realised that. The pressure is now on and should be kept on until changes have been made.

Gosporttory said...

Fully agree in total with average englishman, rollo, DeeDee99, ray and bugsy.

Jonas reminds me of a meeting I had with an English EU Gravy Train bureaucratic on a Caribean Cruise a couple of years ago. Whilst trying to convince me how "good the gravy train was for us all", I asked him what he did.....and guess what, he said that he worked for the EU international development department.....he also stated that he was really pleased about the UK pound being devalued against the euro......because he was paid in euros therefore got a huge monthly pay rise!!!! This one meeting and statement convinced me more than anything else in all my life that we really need to get out of this profligate gravy train once and for all soonest!

Perhaps Jonas is "employed" by the gravy train or has a relative so employed....I honestly trully cannpot think of any other reason for supporting such a corrupt, anti-democratic, profligate bureaucratic nightmare!!!

The sooner the whole fiasco implodes the better for us all.

It looks like only UKIP can help.

David Barneby said...

The original concept of the EU was for six adjoining mainland European states to join together ; all of whom has been overun , occupied or defeated in WWII .
Then the British government wanted to join and so it has snowballed into a huge land mass of 27 states .
Trying to create level standards of living , infrastructure , education , economises etc.etc. is trying to stretch resources too far . more than half the member states are recipients rather an contributors and net contributors are too few to finance the socialist soviet aims of the commission , which in reality has no altruistic sentiments toward member states , beyond achieving the original plan overstretched on a vast scale .

Every country can look after their own environment , educational exchanges may be nice for the students , but are not necessary .
Every country is better living within its own means , having its own currency , valued in line with its economy . All men may be equal in the sight of God , but that should not be translated into actual reality .
I do not see that leveling education standard in Europe is necessary ; I believe that most countries were near enough level .
Education standards have levelled down in Britain , the young lack grammar and spelling , to even express their own language .

People argue that Britain is inconsistent in its relationship with the EU . On the one had you have government that thought it good for the economy to join the EEC . On the other hand you have the people who were lied to and never wanted to be members of the EU ; which put the government in a difficult position .
The primary good should be taken care of by individual countries .

At present the European economy has dried up , thanks to the uncompetitiveness of poorer states ; as a result of the single currency , which may be hugely beneficial to Germany , but not the southern states .

The EU is simply not operating in the interests of the common good .