After the faux pas

Despite the many questions on future EU accounts, triggered by the failure of the European Council of 22-23 November, some focal points emerged from the summit. The first certainty is that the summit failed to produce a political and budgetary agreement over the multiannual financial framework 2014-2020. The second is that the 27 will meet soon to adopt a shared position, since the MFF is necessary to guide, by the middle of next year, negotiations for the 2014 budget, drawn from the expenditure ceilings included in the same seven-year budget. The third element is clearly of a political nature: the meeting last weekend has highlighted once again the divisions that exist between EU countries. Divisions always existed at Community level, but they have increased due to the economic crisis afflicting the old continent.Party interests prevail. "The European Council gives its President the mandate together with the President of the European Commission to continue the work and pursue consultations in the coming weeks to find a consensus among the 27 over the Union’s Multiannual Financial Framework for the period 2014-2020". The final statement agreed by Heads of Government and State before leaving Brussels is laconic if not evasive, to say the least. It states: "The bilateral talks and the constructive discussion within the European Council show a sufficient degree of potential convergence to make an agreement possible in the beginning of next year. We should be able to bridge existing divergences of views" since "a European budget is important for the cohesion of the Union and for jobs and growth in all our countries". Reading between the lines, the document states: an agreement was sought but positions remain distant, thus expert negotiators will seek a solution to make up for the unsuccess of national leaders, determined by party interests. Rigor, mediation, cohesion. Despite almost 20 hours of bilateral meetings, two plenary sessions, three draft MFF, and a large amount of diplomacy the summit failed to reconcile national ‘rigour’ stances, with those prone to a mediation, and those urging ‘cohesion’". The United Kingdom led firmest position: "We are making difficult decisions at home over public spending" thus "it would be quite wrong for there to be proposals for this increased extra spending in the EU", said premier David Cameron, with the support of The Netherlands, Finland, Sweden, Denmark. Cameron demands a 200 billion cut on a draft MFF presented by the Commission of approximately 1000 bln, while German Chancellor Angela Merkel proposed a 100 bln cut to the original draft budget: "We must come to an agreement, but the budget must be downsized", she said. France and Italy acted as mediators, notwithstanding their firm request to maintain adequate funding to agriculture (wanted by both Paris and Rome) and territorial cohesion. Polish premier Donald Tusk headed the group of "net of beneficiary" countries, i.e., Eastern Europe, Spain, Greece, Portual and Croatia, that will be in the "common home" in mid 2013. "The EU budget is necessary to relaunch growth and employment", Tusk reiterated, "and it cannot be downsized without considering the countless programs that the EU is called to implement".The risk of a domino effect. "We have a mandate to pursue consultations in the coming weeks to find a consensus" for an agreement in the beginning of next year", said the president of the European Council Herman Van Rompuy, having understood that the summit had reached a dead end. "The bilateral talks yesterday and the constructive discussion within the European Council show a sufficient degree of potential convergence" to make an agreement possible. Van Rompuy, displaying a certain degree of optimism, nonetheless recalled the MFF will be a "moderation budget". On his part, Commission president José Manuel Barroso, said: "For the first time in the history of the EU real cuts to the budget are on the table. This is taking place in the framework of a large EU, with greater responsibilities compared to the past". Negotiations will resume soon. A meeting between Van Rompuy and the European Parliament (the other EU body in charge of budgetary issues) was scheduled for November 27. Bilateral meetings and diplomatic negotiations will be tabled in the coming days. The real risk however, is that the MFF fiasco of the European Council may have a -negative – domino effect on all other hanging questions, from the bailout of Greece to banking union, from the 2013 budget to the strengthening of Economic and Monetary Union, object of the 13-14 December summit. A lot will depend on the positions of the United Kingdom, that will have to show its determination to remain in the EU.