Vulcan Insight

With time running out, EU budget negotiations begin to heat up

8 October 2020

After six weeks of inter-institutional negotiations between the European Parliament and the German Presidency of the Council of the EU on the EU’s next 7-year budget, no agreement is in sight.

When EU Heads of State and Government emerged from their record 90-hour EU budget summit on 21 July, few in the Council anticipated the difficult negotiations with the European Parliament ahead. German Chancellor Angela Merkel, who had just taken up the Presidency of the Council of the EU, wasn’t one of them, warning of the difficulties ahead in negotiating a final compromise with Members of the European Parliament.

Six weeks after discussions kicked off in earnest, the Chancellor’s predictions continue to ring true, with no agreement in sight between the institution representing EU Member States on one hand, and citizens’ directly elected representatives on the other. Among the primary disputes between the parties remain the overall allocation of funds for EU flagship programmes such as Horizon Europe and Erasmus+, money to tackle climate change and a clear rule of law mechanism, among others.

With time running out before the current financial framework runs out at the end of the year, Parliamentary leaders on Monday (5 October) vowed not to even bring any draft MFF for a vote if there is no strict rule of law conditionality attached to the EU budget. MEP’s hard-line position came in response to the German Presidency’s recent proposal for a watered-down rule of law mechanism. In an op-ed this week, Parliament leaders called the proposed mechanism an anti-corruption scheme rather than a mechanism that ensures the respect for the rule of law.

In a sign of the built-up animosity between the parties highlighted through this week’s exchange of letters, Thursday’s seventh round of negotiations collapsed after only the first hour of talks. In an attempt to bring the Council and Parliament together, the Commission has now been tasked with developing a way forward ahead of negotiations resuming next week. 

Now, in a push for progress, Germany’s Permanent Representative (Ambassador) Michael Clauss wrote to MEPs calling for them to compromise, arguing that is it time “to focus our minds, bridge remaining gaps and reach a deal now.” However, Mr. Clauss’ offer for a possible topping up of “a limited number of programmes” by a “upper single digit” billion euros in the coming years, was quickly and firmly rejected by Johan van Overtveldt, one of the lead negotiators and Chair of the Parliament’s Budget Committee. Responding to the German Presidency’s letter, Mr. van Overtveldt decried the Council’s lack of willingness to compromise and move on the European Parliament’s demands on the rule of law.

The negotiating stalemate highlights the increasingly fractured relationship between the two institutions on a broad array of topics, ranging from the protection of the rule of law and democratic values, over migration policy, to the response to climate change. As such, the current MFF showdown must equally been seen as a proxy in the wider societal policy conflicts between citizens, businesses and governments.