Brexit casts a long shadow over talks on seven-year EU budget

Farmers protesting on the streets of Brussels last week couldn’t agree on the share-out of Common Agricultural Policy funds, not to mind leaders inside the European Council trying to agree on the EU’s seven-year budget of over €1,000bn.
Brexit casts a long shadow over talks on seven-year EU budget
Farmers in Central and Eastern European countries receive less subsidy per hectare than those in the West of Europe. Picture: Aris Oikonomou/AFP
Farmers in Central and Eastern European countries receive less subsidy per hectare than those in the West of Europe. Picture: Aris Oikonomou/AFP

Farmers protesting on the streets of Brussels last week couldn’t agree on the share-out of Common Agricultural Policy funds, not to mind leaders inside the European Council trying to agree on the EU’s seven-year budget of over €1,000bn.

The farmers from across Europe protested against proposed cuts to the EU’s CAP budget.

But farmers in Central and Eastern European countries receive less subsidy per hectare than those in the West of Europe.

The budget proposal the European Council was considering has scope to gradually close less than half of the gap between farmers in less and better funded member states, by 2027.

But this so-called external convergence — levelling payments to farmers across the EU — is only a minor skirmish to follow the ongoing battle by pro-farmer member states against plans to cut the CAP budget by around 14%.

Casting a long shadow over the talks on this seven-year budget is the same adversary which has dominated EU affairs since 2016 — Brexit.

Without the UK’s pre-Brexit contribution, there’s a €75bn hole (€10bn-12bn annually) left in the EU budget.

At the same time, the EU wants more money for new areas such as the digital agenda, the fight against global warming, and migration control — perhaps an over-reach by over-ambitious EU leaders who still have to deal with Brexit and its fallout.

There are deep differences between member states over the seven-year budget, and the European Council made little obvious progress last week tpwards solving them.

A group of net contributors refused to approve bigger spending, instead pushing for big cuts in funding for farmers and poorer regions.

Member states have split into distinct groups, according to their budget demands.

The Frugal Four are net budget contributors Austria, Denmark, Sweden and the Netherlands, seeking a budget of 1% of EU27 gross national income, and permanent reductions to what they contribute to the EU.

The Friends of Cohesion group of 17 (also known as the Friends of an ambitious Europe) are primarily southern and eastern EU countries fighting for cohesion spending to remain high.

For the European Parliament, which can approve or reject the council’s budget, but can’t make amendments, the proposed budget cuts on agriculture and cohesion are also unacceptable.

The Visegrád Group cultural and political alliance protects the interests of the Czech Republic, Hungary, Poland and Slovakia.

Ireland is in a big group of member states fighting for higher than proposed agriculture spending, and that is the only group that can claim to have won a small victory last week, as a new discussion paper presented by European Council President Charles Michel suggested an additional €4.4bn for the CAP, including €2bn for direct payments and €2.4bn for rural development.

Other advocates of higher agriculture spending in the budget talks include France, Poland, and Spain.

Leo Varadkar said Ireland can live with paying more into the EU budget, but can’t accept receiving less agricultural funding.

“We can’t accept a situation where we pay more but get less out.”

He noted that CAP payments comprise almost 75% of Irish farm income.

French President Emmanuel Macron said the EU won’t be able to meet its ambitious climate goals if it fails to properly finance farming.

He could yet play a key role in budget agreement, having teamed up with German Chancellor Angela Merkel to mediate in the budget talks and try to foster consensus.

It may yet be up to Germany to oversee agreement, if a deal is not sealed during Croatia’s rotating six-month presidency of the Council of the EU, which Germany takes on in the second half of 2020.

Belgium’s Prime Minister Sophie Wilmès said the Frugal 4’s inflexibility is difficult, because they know that a net payer left the EU, and extra money is needed if the EU is to progress.

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