What If?

CC image by Nils Andresen from Flickr

We all know the next European budget negotiations will be tough. Some actors have already formulated their red lines: the European Parliament wishes to become an equal player in the big game and is interested in making the budget more flexible and introducing a new own resource; the British want to freeze the budget and won’t talk about their rebate at all; the Visegrad states ask for more solidarity in terms of cohesion funds as well as equal treatment in CAP payments; Paris has made clear that CAP should stay like it is and cohesion policy should be reduced, whilst Berlin sticks to its three No’s – no increase of German net payments, no reduction of Cohesion funds and CAP payments and no EU tax.
These positions will obviously not correlate. The EU, it seems, is running into a dead-end and nobody sees how to escape the stalemate. But what would happen if all actors stuck to their maximum position? The Lisbon treaty not only introduced the multiannual financial framework, it also defined what would happen if no consensus was achieved.
If the European Union were unable to agree on a Council regulation determining a new financial framework, then, according to Art. 312 of the Treaty on the Functioning of the European Union, the ceilings and other provisions corresponding to the last year of that existing framework shall be extended. That means the European Union will keep the budgetary status quo until a new consensus is achieved to change it.
A stalemate will not mean the end of European integration. And for some member states, keeping the status quo might be better than negotiating a new MFF where the likelihood of reaching a deal which is more expensive in terms of net payments is high. So, having in mind also negotiation tactics, it might be a worth thinking about prolonging the budgetary status quo.
However, many lines of European expenditure are dependent upon the successful negotiation of a new MFF. The multiannual programmes in cohesion policy, the European Agricultural Fund for Rural Development of the second pillar of CAP and the multiannual framework programme for research will all end on 31st December 2013. Without new legislation, the European Union is not allowed to continue the programmes let alone to launch new spending programmes. And without a new MFF there will be no legislation for new multiannual programmes.
Thus, it’s not the question who can and will be prepared to live on with the budgetary status quo and who will play the game really hard. A failure would mean that the EU will not be able to continue its multiannual programmes to help poorer regions, to improve competitiveness, to finance European student programmes etc. Deadlock in the European financial framework negotiations would mean serious repercussions for the European integration process as such.
Failure would be a sign that the European Union is not able to act as a community, to balance divergent positions or to agree on a common reform path. Failure would be more than a tactical game. It would raise a big question mark over the sense and legitimacy of European integration.

Peter Becker

About Peter Becker

Peter Becker, M.A., is a member of the research division “EU Integration” of the Stiftung Wissenschaft und Politik (SWP), a leading German think tank and the founding institution behind the German Institute for International and Security Affairs. His areas of expertise are the future of the European Union, German European policy, enlargement of the European Union, social and economic policies in the internal market. His current focus lies on the agenda 2007-2013 and the negotiations on the financial perspective, the future of the European structural policy, the Lisbon Strategy and the future of the European Social Model.