Europe hammers out seven-year budget deal

The European Union edged closer to a seven-year budget after negotiators backed down from demanding an €11.4bn increase, breaking a four-month deadlock.

The European Union edged closer to a seven-year budget after negotiators backed down from demanding an €11.4bn increase, breaking a four-month deadlock.

After talks lasting seven hours, Austrian finance minister Karl-Heinz Grasser, representing EU governments, agreed last night to add an extra €2bn to the €830bn budget for 2007-2013, drafted by EU leaders in December, said Nikola Doing, spokesman for the Austrian EU presidency.

As part of the deal, the EU will also boost its emergency reserve, such as funds used to cope with floods and other emergency situations, by €1.4bn and add €487m for pensions of EU civil servants and other administrative matters.

Details of the new package will be presented to the European Parliament today by Austrian chancellor Wolfgang Schuessel, whose country holds the rotating six-month EU presidency, and EU Parliament president Josep Borrell.

The parliament, which can veto the EU budget but is not directly involved in structuring it, had been holding out on giving the green light to the seven-year package, demanding a substantial increase in funding for areas such as education, research and trans-European energy, telecommunications and transport networks.

It said the old draft was not sufficient to help the EU tackle the challenges of globalisation.

The new draft has still to be approved by the 732-member assembly. A quick deal is crucial for the 25 EU countries to be able to start planning EU-funded projects for next year. The budget is likely to come up for a vote in May.

“This budget would give the EU a sound financial framework after the enlargement,” said Robert Soltyk, spokesman for EU Budget Commissioner Dalia Grybauskaite, who also took part in last night’s gruelling negotiations. The seven-year package is the first that covers the 10 new member states which joined in 2004.

If the legislature does not approve it, the EU will operate on the basis of annual budgets, meaning less funding for the 10 new members and annual wrangling between member states.

EU leaders have agreed to a mid-term review of the budget in 2008 or 2009, which could lead to cuts in the EU’s massive agricultural subsidies, releasing money for other areas that would boost its competitiveness.

The parliament won the right to be consulted on the review.

The EU governments have also agreed to demands by the EU assembly to declare at the end of every budget year that EU funds have been spent properly, a proposal welcomed by the EU’s top auditing watchdog, which has withheld approval for the EU budget for 11 years.

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