» Thursday, December 1, 2005

EU Budget

Asked if the Prime Minister had felt that President Borroso’s spokesman had been helpful when he compared the Prime Minister to the Sheriff of Nottingham, the Prime Minister’s Official Spokesman (PMOS) said that what was probably most helpful for him to do was to reflect what the Prime Minister had said in Kiev this morning in reply to a similar question. Our position was that our first preference was that stated by the Prime Minister in his speech to the European Parliament last June. That preference was to have a process for CAP reform and as a result of that for the rebate to go on the table. As part of driving that forward we would have the G7 meeting this weekend at which the Chancellor would be talking to his G7 colleagues as well as representatives from India, China and Brazil to try and get some sort of strong signal from the WTO round in terms of moving things forward. That very much remained our first preference.

However the Prime Minister had indicated this morning that we also had to recognise that that might not be possible at this stage. Therefore we had to consider what alternatives there might be, at least in terms of future financing. In terms of that, as the Prime Minister had set out this morning, there were two basic principles. Firstly, and this went right to the core of what we had been saying all year, the rebate and the CAP were inextricably linked, to use the Prime Minister’s words. There could not be fundamental change on one without fundamental change in the other. The other key principle was that which had guided our approach to the accession countries since 1999. We had recognised their special position and recognised the need to help them develop. That was why, all along we had not taken the full share of the rebate that we could have done.

If we were to get an overall big deal, that same kind of mechanism and that same spirit would guide our approach in these discussions. That was because we believed that with regards to the accession countries it was in our national interest, as well as Europe’s interest, that they developed. That was why the Prime Minister had set out the basis of our approach this morning if we did not get a big deal. That was to have a smaller budget than Luxembourg had proposed, to continue to pay our fair share for enlargement, to have a budget where we were in rough parity with similar sized nations of similar wealth and also to have a mid-term review, chaired by the Commission, which would allow us to look at the overall structure of the budget and perhaps make changes.

The PMOS emphasized two things. Firstly, throughout all of this, no proposal, not even Luxembourg’s proposal, would lead to our rebate diminishing. Our rebate would go up. Secondly, the accession countries would still get a huge increase in investment. The question now was, if we didn’t get the big deal, whether we could make it easier for the accession countries to get their money sooner, rather than later. They were saying they wanted a deal now and we understood that. That was why we had adopted this approach.

Asked how much of our rebate we had been foregoing, the PMOS said that he did not have the precise figures but since 1999 we had not taken a proportion of our money. It was that sort of mechanism, in that spirit, which would shape our approach. This approach had been supported right across the board. All shades of opinion since 1999 had recognised the need to help the accession countries become more prosperous, to develop and therefore expand their markets for British industry and British commerce.

Asked if he was saying that we were prepared to forego at least some of our rebate in return for the promise of reform of the CAP at some later stage, the PMOS said that perhaps there was a misunderstanding. What the Prime Minister had said this morning was that the two issues of the rebate and CAP reform were inextricable linked. What we were talking about was paying our fair share to the accession countries which was entirely different. In terms of the accession countries what we were talking about was developing their infrastructure and systems, which would allow them to develop into prosperous countries which could then buy products from us. The two areas should not be confused.

Questioned further the PMOS said that the mechanism which had been in place since 1999, before the accession countries had joined, was that we had foregone money which we could have asked the accession countries to pay us. That was because we believed it was in our national interest, and in Europe’s interest, to help them develop, rather than load more burdens onto them. That was different from the CAP policy concerning the original 15 countries which produced the distorting affect on the budget and which was why the rebate had come into existence. We needed to be clear about why the rebate existed and why the Prime Minister had again said that he was not prepared to see change in the rebate unless there was fundamental change in the CAP.

Asked if we were considering freezing the rebate the PMOS said that he would not get into the detail of the discussions but it was a simple statement of fact that the rebate would go up. The rebate would have gone up under the Luxembourg proposals which we had rejected. The rebate would still go up under the proposals which we were discussing at the moment. The question was whether we would continue to forego the payments we had given up from the accession countries for the reasons we had given in 1999. At the same time you also had to pose the question of whether you could do a deal which might result in the accession countries getting less then the headline theoretical figure, but would result in them getting the money faster. That was the debate we were having with the accession countries during this trip.

Asked if there was any precedent for this donation to developing countries, the PMOS said that this was not a donation, this was simply choosing not to take money in order to help countries develop. The disparity in wealth between accession countries and the original 15 was precisely why this policy had been adopted in 1999. That disparity remained and it was believed to be in our national interest to close that disparity. Indeed if you looked at the remarks of the Polish Prime Minister today, he had made precisely that point. The key question was whether you helped the East Europeans to reach the EU average in terms of wealth and prosperity, enabling them to buy British goods and British services and British products, as quickly as possible, or you did not. The approach since 1999 had been that that was what we wanted to do. As the Prime Minister had also said this morning, there would be pain in this for accession countries because they too would have to show a degree of flexibility. That was what we were asking them to do.

Questioned as to whether our net contribution to the EU might rise despite an increase in the rebate, the PMOS said that he would not get into the detail of contributions and so on while the discussions were ongoing. What was important was that people recognised what we were talking about. On the one hand we were talking about the rebate we would get as a result of the CAP and on the other hand we were talking about not claiming our entitlements from the East Europeans. There was a distinction between the two areas and it was important to maintain that distinction.

Asked how hopeful we were of these talks proceeding, and that the accession countries would support our proposals, the PMOS said that as with any discussion it was better to talk at the end of the round rather than at the beginning. Asked if his money was on the big deal or the little deal, the PMOS said that the big deal was our first preference, and that had lots of advantages in terms of the WTO and so on, and the Prime Minister believed this was an issue that Europe could not walk away from. On the other hand we had to be realistic and recognise that it was difficult. It was difficult for all the reasons that everyone understood. That didn’t mean that we were not going for the big deal and that did not mean that this was not an important issue at this weekend’s G7 meeting. It was very important. At the same time we had to think about a fallback position if we did not secure the big deal. That was why we had adopted the approach we had and why we were setting out the approach so that people could properly understand it rather than saying that this meant surrendering the rebate altogether.

Briefing took place at 13:00 | Search for related news

1 Comment »

  1. There is no need to give away any of our Rebate for any reason wharever. But it is being done to increase the image of Mr. Blair being "a good European" with no regard to what it means for we taxpayers. And I do not include the P.M. in that because with his salary and forthcoming inflation proof pension the odd thousand or so will not matter.
    I do not understand the comment that if we give away some of our Rebate then that will mean increased activity in the newly joined countries which will in turn mean increased openings for our industry. If that were the object then how much more realistic it would be to give the money directly to Hungary or wherever so bypassing the not yet audited accounts of Brussels and knowing that the money is going where it is needed, especially if we stipulate that UK firms must be in charge of whatever prijects are started.
    Will the P.M. or Chancellor give precise details of what this charade will cost us without any prevarication or spin. Somehow I doubt it.
    If this does not happen then we shall know that it has been done for the greater glory of Tony who will be rightly branded as a traitor.

    Comment by Charles Taylor — 3 Dec 2005 on 11:13 am | Link

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