President Nikos Christodoulides was on Thursday one of 17 European heads of government to sign a letter calling for an end to the European Union’s budgetary rebate system, in which the five net contributors to the EU’s budget receive reductions in their contributions.
The letter was published following a meeting of the leaders of the EU’s “friends of cohesion” group, the 17 states which are advocating for potential cuts to funding for agriculture and cohesion in the next multiannual financial framework, the bloc’s budget for the period covering the years between 2028 and 2034, in Brussels.
On the matter of rebates, it said that “preferential gross national income-based corrections have no place in a modernised and fair EU budget”, with EU contributions, and therefore rebates, based on GNI.
At present, Austria, Denmark, Germany, the Netherlands and Sweden receive rebates, with Germany the largest rebate recipient, at over €3.6 billion per year, and the Netherlands and Sweden both also taking over a billion euros per year in rebates.
In addition to the demand for an end to the rebate system, the letter also called on the EU to “preserve he EU budget’s capacity to deliver”, pointing out that in budget proposals submitted first by the Cypriot government in June and then by the Irish government on Saturday, the overall size of the budget has shrunk.
It said that in total, the size of the budget has shrunk by 1.02 per cent of the EU’s GNI, excluding Next Generation EU payments, the European Commission’s extraordinary package brought about to help member states to recover from the Covid-19 pandemic.
“We believe the final agreement should ensure that the EU budget can address existing and emerging priorities while preserving key policies,” it said.
It then called on the EU to “preserve national and regional partnership plan envelopes”, through which member states will be allocated funding to spend on matters such as “cohesion” projects, the word used to describe efforts to reduce regional inequality across the continent, and agricultural funding.
EU plans to invest €865bn in national and regional partnership plans
At present, the EU plans to invest €865bn in national and regional partnership plans across the bloc, with the Irish government saying of its latest proposal that “the majority of member states called for the retention of national allocations for cohesion, agricultural, and fisheries policies under national and regional partnership plans”.
It said that this non-cutting of those budgets had been proposed by the Cypriot government in June, and that “given this position, and that funds under these programmes have not seen increases in comparison to the current multiannual financial framework, the Irish presidency [of the Council of the EU] retains this allocation”.
Thursday’s letter said of the matter that “adequate resources must be accompanied by rules that safeguard the specific objectives of these policies and allow member states and regions to make effective use of the available funds”.
It also called on richer EU member states to contribute more to the budget in what it described as “a fairer, non-regressive, and more balanced revenue side”.
“We are ready to engage constructively on the revenue side, including our own resources, but the parameters of both existing and new own resources must ensure a fair and balanced distribution of the financial burden among member saes and address regressivity across the revenue side as a whole,” it said.
Looking ahead to the forthcoming negotiations, “we have committed to remaining united around these four principles throughout the negotiations, and to working together to ensure that our shared priorities are reflected in the final agreement”.
Alongside Christodoulides, the letter was signed by the leaders of Bulgaria, Croatia, the Czech Republic, Estonia, Greece, Hungary, Italy, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, and Spain.
Members still divided despite aim to devise budget by next year
However, member states in the continent’s north and west are keen to cut cohesion and agriculture funding so as to reallocate more funds to matters such as defence and competitiveness.
These differences are straining negotiations, despite most member states hoping to have the next multiannual financial framework completely devised by the end of the year.
However, budgetary constraints may be somewhat eased in the coming months, with negotiations between the EU and the United Kingdom currently underway with a view to the UK rejoining the EU’s internal electricity market in exchange for financial contributions to the cohesion policy.
Further rapprochement may bring about further contributions on the UK’s part, with the country’s Prime Minister Andy Burnham having come out in favour of closer relations with Brussels and even suggested that the country could “go all the way” and rejoin the EU in the coming years.
The UK was the first rebate recipient when the practice was established in 1984.