EU budget battle: Friends of Cohesion vs. Frugal Four

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European leaders debated and argued into the early hours of Friday about how to divide and spend an estimated €1 trillion euros ($1.1 trillion) over the next seven years.

According to diplomatic sources cited by various news agencies, the major sticking points arose in a confrontation between the group of 16 countries known as Friends of Cohesion and the wealthier countries that are reluctant to plug the budget gap left by the departure of Britain.

The latter group, nicknamed the Frugal Four, which includes Austria, Denmark, the Netherlands, and Sweden, wants to keep national contributions to the common budget at one percent of the gross national income (GNI) while the European Parliament wants the contributions increased to 1.3 percent.

The EU’s executive arm, the European Commission, advocates 1.11 percent while Council President Charles Michel of Belgium put forward a proposal of 1.074 percent.

Every country is wrangling over climate investment, border security and farm subsidies, with EU leaders lobbying for their own national interests.

Although a budget of €1 trillion sounds significant, it actually totals approximately 1 percent of the gross national income of the 27 EU nations combined. The debate is mostly over 0.3 percentage points.

In addition to keeping payments level, the Frugal Four—together with Germany—also want to maintain the compensation payment scheme introduced by the 1984 common agricultural policy (CAP).

On the other hand, the Friends of Cohesion — including Hungary and the rest of Central Europe — don’t want to accept any reduction in the regional development funds they receive, especially not at the benefit of a hazily defined carbon emission scheme.

The Friends of Cohesion – and France siding with them in this respect – are afraid that cutting the budget will erode already shaky popular support of the Union.

“With Great Britain leaving, it is a clear signal we have to show our citizens that Europe is alive and well, and we can continue functioning,” Latvian Prime Minister Krisjanis Karins said.

France, which President Emmanuel Macron is intent on shaping into the leading force of the Union, shares this view.

“It would be unacceptable to have a Europe that compensates the departure of the British by reducing spending,” Macron said.

As if to stress his point, outside the summit farmers drove their tractors down the street in protest for more funds for agriculture.

But there is also the thorny issue of some member states wanting to link EU subsidies to rule of law criteria, which Hungary, Poland and Romania reject as an anti-democratic and haphazard criterion.

Council head Michel has to balance all these conflicting demands and come up with a new proposal Friday morning when horse-trading will resume in Brussels.

Title image: Hungarian Prime Minister Viktor Orbán and his Belgian counterpart Sophie Wilmes at the meeting of the European Council on February 20. (Prime Minister’s Office, Vivien Cher Benko)

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