RPT: REVIEW - Special European Council Ends With No Agreement On Bloc's 2021-2027 Budget

BRUSSELS (Pakistan Point News / Sputnik - 22nd February, 2020) The two-day marathon negotiations on the future of the European budget have concluded on Friday with no agreement achieved and with shadows over European Commission President Ursula von der Leyen's aspirations of a consensus on Europe's "modern budget."

With over a trillion Euros ($1.08 trillion) set to be allocated between 2021-2027, EU member states are trying to meet the targets of von der Leyen's European Green Deal, that pledges to make the EU entirely carbon-neutral by 2050. Moreover, Brexit is expected to cost the union roughly 75 billion euros over the next seven years. These issues together with heavy debates between the bloc's net contributors and net recipients made a possible consensus elusive even before the negotiations started.

On Thursday, ahead of the Special European Council summit, von der Leyen set the main targets of a future budget, putting the Green Deal and compliance with the realities of digital age as priorities.

"We need a modern budget, including the European Green Deal and fit for the digital age. The proposal of Charles Michel, the president of the European Council, is a good starting point, but we need to invest in these new priorities and modernize the budget. It is very important since the budget is tight that all new resources new ecological taxes on plastics for examples would mitigate the pressure while financing the ecological transition. Europe must embrace it to face the future," von der Leyen said prior to the talks.

However, given that the Council failed to reach an agreement on the budget, the European Commission president noted on Friday that there was "long road ahead," indicating a high urgency of the issue.

"We need to continue to work hard, because as we know, we have a long road ahead of us in order ultimately to reach a result, because first of all we need a Council decision on the budget, but then the Parliament needs to get involved as well and give its agreement, and then the relevant decisions will need to be implemented in the form of projects ... With that in mind, it is a matter or urgency, time is pressing, because ... we are to complete all these lengthy steps by the end of the year. If we do not do that, we will have no budget," von der Leyen said at a press conference.

The so-called frugal states, comprising Austria, Denmark, the Netherlands, and Sweden and Germany, the EU heavyweight net contributors to the European budget refused to see the budget going above 1 percent of the European GDP.

On the other end, there are major beneficiaries of EU subsidies Poland, Hungary, Greece or Portugal. They receive subsidies in the form of "structural funds" that help them catch up with the rest of Europe. This clear contradiction significantly obstructed the negotiations and raised questions of whether the frugal states "took the budget hostage" of their position or whether they are reasonable, since they are those paying bills.

Clearly, less than a month after Brexit, the bloc is under stress, and this was expected the 27 member states were supposed to agree on a number, or rather a ceiling for Europe's budget for the next seven years, with each delegation mainly focused on its own contribution to the budget examined with a magnifying glass.

The overall level of 1.087 trillion euros proposed in December 2019 is 48 billion euros lower than the European Commission requested, representing 1.07 percent of the gross national income (GNI) of the European Union at 27. During the negotiations, the budget target for von der Leyen and the European Commission was 1.135 trillion euros, or 1.29 percent of GNI.

The most difficult unresolved question left after the negotiations is the massive borrowing that the European Commission wants to launch 1 trillion euros to fight climate change. Many are ill at ease with this huge debt planned to be made by the bloc for a goal which is only defined by a vague blueprint to explain what will be done.

Another hurdle to the "modern budget" was Brexit, as it remained unclear whether the member states should tighten the purse strings or make up the deficit. However, it is also unclear who would close this gap in the latter case.

A date for a new round of European Council negotiations that would be the second attempt to bring the positions of the EU countries regarding the budget is not set yet but is expected to be announced soon given the urgency of the issue highlighted by von der Leyen.