Downing Street Says » EU Budget

Asked for a flavour of the bi-lateral discussions the Prime Minister had held so far with other EU Prime Ministers today, the Prime minister’s Official Spokesman (PMOS) said that whilst all came with specific issues which he could not comment on, they, equally, all believed that there was a serious basis for possible agreement here. That did not mean that there would definitely be agreement but everybody understood that this was a serious effort. All those we had spoken to so far had supported the review clause with regards to the CAP and the budget. Serious discussions were taking place and would continue. Asked if that included talks with Angela Merkel, the PMOS said that he had been primarily talking about the talks which had taken place today. With regards to the conversation with Chancellor Merkel earlier this week, that had been very constructive. We understood where she was coming from and she understood where we were coming from.

Asked how long these talks would go on for, the PMOS said that there would be another series of talks tomorrow and we would be speaking with the Prime Minister of Denmark on Monday. Beyond that we would talk to people as and when we needed to talk to them.

Asked if any of the leaders had expressed any support for out budget proposals, the PMOS said that individual countries would speak for themselves. As we had said all along, we realised that what we were presenting people with was a hard choice. It was a choice between holding out for an ideal position or accepting the reality which was that first of all, no country in the history if the EU had ever spent the headline figure in terms of aid because of the absorption factor. Therefore we believed that what we were proposing was a more realistic approach. What we also believed was that this would meet the very evident demand of the Accession countries for a deal now so that they could access the money immediately rather than having to wait up to two years.

The very realistic prospect was that if we did not get a deal now it could be one or two years until we did get a deal. Even at that stage it might actually fall into the lap of the European Parliament. So there were real pressures to try and get a deal now which was why we were making the efforts we had to get one. Asked what he meant when he said that the matter might go to the European Parliament, the PMOS said that, as he understood it, if we did not get a deal by 2007 then the matter reverted to the European Parliament. The European Parliament would not allocate money to the Accession countries but within the original 15. The Accession countries best hope of getting their money was in getting a deal before 2007. The other factor that needed to born in mind was that the mid-term review of the budget remained very important. Maintaining the pressure on the CAP remained very important. The best way of doing that was to retain the support we had of the Accession countries. That was another reason why we believed it was in Britain’s interest, besides our economic interests, to press for a deal now.

Asked if the Prime Minister was more optimistic of a deal, the Prime Minister said that nobody was pretending that this was going to be anything other than difficult. However what was very clear was that people thought that there was the possibility of a deal which was worth going for. That was why we were putting in a really serious effort and he didn’t see anybody now suggesting that we were doing anything other than making a serious concerted effort.

Asked why we couldn’t just give the Accession states a few billion more Euros from our rebate, the PMOS said that the important thing was that people paid their fair share. If this deal was to go through then we would be on a rough parity with similar sized countries such as France. That was an important point. In terms of paying our fair share, we would be paying our fair share towards the cost of enlargement by agreeing not to take what technically we could on the rebate. The Foreign Secretary had said that we would be looking at proposals again in the light of discussions. The reality of the situation for the Accession countries was that whilst the figure we had proposed was slightly less than the headline figure there was a deal for the taking here.

That deal would give them their money now, we would find mechanisms which would allow them to spend that money both more quickly and more effectively because we believed it was in their interest to start developing their economy now and it was in our interest because the market for British goods would be there faster. That was the basic choice that people faced. If you looked at the experience of Ireland, Portugal, Spain and Greece, none of them had actually spent the full amount of money which theoretically they could have accessed. Equally their trade has been of huge benefit to this country if you looked at the trade flows and how they had grown since they joined the EU.

Asked when we were likely to see a second proposal, the PMOS said that he thought it would be sometime early to the middle of next week. The important thing about this was that we had the period between now and effectively next Thursday to try and get the sense of where people were. What was good was that people were approaching this in a very serious way and they recognised that we were serious about it too. That didn’t guarantee that we would get a deal, but it did mean that the discussions were taking place in a very serious and proper way.

Asked about the issue of absorption, the PMOS said that this was based on two things. Firstly it was based on the analysis of past experience of new member states. We had a track record of EU-expansion to judge on. Quite rightly vast amounts of money had gone to Ireland, Portugal, Spain and Greece to bring their economies up to the EU average. The maximum that any country was able to absorb amounted to just under 3% of GDP. Secondly if you looked at the amount of money that the Accession countries would get, under our proposals, it amounted to something like 260billion Euros over seven years. By any accounting mechanism that was a massive injection of funds.

Asked what we were basing out optimism of CAP reform on, the PMOS said that we should recognise that some reform of the CAP had already taken place in terms of payment mechanisms and moving away from subsidising production. In terms of the momentum of debate within the EU, we could also see in the response to the Prime Minister’s speech to the European Parliament last June or the contribution that we had got in terms of comments made by various leaders around Europe, the direction was all one way. It was a debate now about the pace of change. People recognised that Europe had to put its money into facing the challenge of globalisation, rather than continuing the CAP. There was a debate about change and we had to recognise equally that, for instance Ireland or Austria among others, were resistant to the kind of rapid change that we would like to see.

Put to him that the Polish Prime Minister had expressed concerns about this being referred to as a sort of "Marshall plan" and had pointed out that the Accession countries were not asking for charity, the PMOS said that he understood the historical sensitivities of phrases like the "Marshall plan". Equally this was not about charity. This was about an investment, not just in individual Accession countries, or even Europe’s future, but the British national interest. It worked to our long term advantage.

Asked if we expected any progress with President Chirac, the PMOS said that this was about everyone making hard choices. That was the case for every country in Europe. This deal, if we could do a deal, would not be anybody’s ideal deal, but it might be the best deal that we could get for Europe. Nobody was saying that that was inevitable. Nobody was saying that success was inevitable but we were going to give it a very hard go.

Asked about the vast sums of money going from the CAP to certain corporations, the PMOS said that he wouldn’t comment on individual corporations. There was a structural issue about the proportion of the European budget that went to 2% of the working population and whether that money would be better spent on developing new skills, raising our IT capability and so on. That was a structural issue and should be looked at as a whole rather than focussing on individual companies. Our first preference was to reform the CAP now. We believed very firmly that there should be a meaningful process of mid-term review and the good thing from our discussions today was that others seemed to agree with that.

1 Comment »

Now lets be realistic –

There are enough EU leaders who would derive political capital from showing that they made Tony Blair fail to ensure that this discussion will go nowhere.

Why doesn’t Tony stay at home and do something useful instead of racking up expensive trips with no hope of a positive outcome?
Comment by Roger Huffadine — 9 Dec 2005 on 11:08 am | Link

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» Thursday, December 8, 2005

EU Budget

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