EU commissioner critical of British accounting

EU Budget Commissioner Dalia Grybauskaite slammed Britain’s defence of its EU rebate today, saying London was using “creative accounting” in its arguments to keep the multi-billion-euro payback.

Grybauskaite said the rebate will grow to €7.7b by 2013 – up by more than €2bn – if the system is remains unreformed.

She said the EU was looking to Germany’s new chancellor, Angela Merkel to help break months of deadlock among the 25 EU nations over the financing of the bloc’s 2007-2013 budget.

“There is a hope this country can play a significant role,” Grybauskaite told reporters, pointing to an eagerness expressed by the new German government to secure a budget deal at next month’s EU summit.

Grybauskaite clashed with British Foreign Secretary Jack Straw on Monday in talks over the rebate, but she is due to meet him again next week to work on an EU financing proposal to present to EU governments on December 5, ahead the summit.

Britain currently holds the EU presidency and is chairing the budget talks.

It has come under heavy criticism from other EU nations for not pushing the talks forward and for clinging to an annual rebate others claim is unfair.

Budget talks have been deadlocked since negotiations collapsed at a June summit over Britain’s refusal to give up the rebate and over Dutch and Swedish concerns that they were paying too much to EU coffers.

The outspoken EU commissioner criticised the way London was defending its rebate. “There is some misinterpretation by the UK treasury,” Grybauskaite said.

Britain was awarded the rebate in 1984 after complaining that it put too much into EU coffers compared to what it received in EU handouts to farmers and poor regions.

She said the statistics used to justify the rebate to British citizens were not based on the same statistics used by other EU governments.

Grybauskaite said Britain, unlike other EU nations, was basing its calculations on its commitments to the EU budget rather than the actual payments in any given year – which were often much lower.

“Commitments are virtual payments,” she said, adding that using them as a base for calculation was “creative accounting – which all of Europe was not used to and agreed not to use in that way.”

She joked that Britain made a habit of being out of step with its continental partners, driving on the left side of the road and refusing to adopt the metric system.

The former Lithuanian finance minister also was critical of Britain’s negotiating tactics and doubted a deal would be ready by the December 15-16 summit.

France and Germany have taken the lead in condemning the rebate, saying it is no longer justified and is out of date following reforms of the EU’s farm subsidy programme.

The rebate, won by then-British Prime Minister Margaret Thatcher, has huge political significance for EU-sceptical Britain and is widely seen as key to a future funding agreement.

Straw has said Britain is willing to give up the rebate only if France and others agree to further farm aid reforms.