EU budget deal held up by Berlin’s internal debate, bloc’s finance chief says 

Germany’s internal fiscal discussion is currently the biggest obstacle to a deal on a mid-term revision of the EU’s seven-year financing plan, the EU’s Budget Commissioner Johannes Hahn said in an interview on Thursday (30 November).

“Now the biggest problem is that Germany is so distracted by their domestic issues that they don’t find time to deal with this (EU budget revision),” Hahn told a group of reporters, including Euractiv.

Politicians from Germany’s three-party governing coalition are frantically searching for ways to close the gaping hole in the budget, following a ruling by the country’s top court which struck down the government’s plan to use COVID-recovery funding to finance climate action.

“We are particularly faced with a lot of time constraints, this is why time is of the essence more than usual.”

“I hope there is a quickly growing understanding in Berlin that they have a particular responsibility as the biggest economy in the EU. So without their significant involvement and engagement, we will not agree,” he added.

EU leaders set a deadline to agree on an increase of the EU’s seven-year budget at their next meeting in December and wrap up before next June’s European elections, when the Parliament, the other co-legislator, will be off for at least four months.

“Of course, I have some alternative scenarios. But I’m not interested in giving anybody any leeway already at this stage,” Hahn said.

“So every push must be made to have an agreement as a team together,” he added, saying that the package on the table is the best offer for all.

In June, the European Commission proposed an increase to the EU’s budget worth €66 billion to fund migration, financial aid to Ukraine, interest rates, and competitiveness.

But at their last EU summit, several leaders – including Belgium, Germany and other fiscally ‘frugal’ countries – spoke against the Commission’s proposal, asking Brussels to re-purpose funds and unused money.

Hahn insisted that negotiations must finish as soon as possible, to leave time for the Parliament to also agree on the member states’ plan and include the increases in the annual budget for 2025.

Asked about what other plans the European Commission had in mind if the member states refused to greenlight the package, Hahn declined to comment.

“For now I only heard that whatever we propose, there must be cuts. We never have a debate on what is needed, how much it costs, and how to finance it. We could have proposed 30, 100 billion (…) they would have proposed cuts!”

Ukraine Plan B

Hahn hinted that a narrower agreement on ‘Ukraine only’ worth €50 seems unlikely.

“Some member states also said that [agreeing on] Ukraine only is not acceptable.”

“Some countries are interested in migration, or competitiveness,” he said, hinting that agreeing on Ukraine’s financial aid only while postponing the rest of the discussion might hinder swift agreement on other priorities. 

He stressed, however, that, for now, “the support for Ukraine is not contested by anybody”.

If Hungary’s Prime Minister Viktor Orban – and to a certain extent his Slovak counterpart Robert Fico – plans to hamper the agreement on Ukraine’s package, a Plan B could, however, be considered, Hahn said.

“One option is to have bilateral agreements with 26 member states [ie without Hungary], but it is a more cumbersome process”, Hahn said, echoing what Trade Commissioner Valdis Dombrovskis said earlier last month.

Redeployements rather expensive

Commenting on the idea raised by EU member states, including the Spanish EU Council presidency, to “redeploy” parts of the existing budget to fund new priorities, Hahn remained cautious.

If the countries want to keep the target of €66 billion and finance it by redeployments, “they would have to cut all EU programmes in the coming years by 30%”, he told reporters.

“It is politically unrealistic.”

“We are not stubborn or refusing any ideas, the slogan is good [on redeployement] but when we do propose, it is rejected by several if not majority of member states.”

The commissioner insisted that the proposed €66 billion increase resulted from discussions he had held with all EU member states, who asked him not to impact the cohesion funds and common agricultural policy (CAP), which together constitute around two-thirds of the EU budget.

Adding to that the impossible cuts in administrative budgets, he said 75% of the budget is therefore untouchable. The four years left in the seven-year budget, he said, amounted to €180 billion.

“Now some member states have great ideas to find the €66bn in the €180bn… Good luck”.

[Edited by Alexandra Brzozowski/Zoran Radosavljevic]