EU newcomer states rallying against UK presidency's proposed budget cuts

Photo: European Commission

British Prime Minister Tony Blair, whose country now holds the rotating presidency of the European Union, faces a frosty reception at meetings in the Estonian and Hungarian capitals this week over his plans to push for lower subsidies to new EU member states like the Czech Republic. Mr Blair's as yet unpublished plan to reduce the overall EU budget for 2007-13 in large part hinges on concentrating cuts on the new member states - the poorest within the union.

Photo: European Commission
Tony Blair hopes to persuade the Czech Republic and the other nine countries which joined the European Union in May last year that they won't even feel the pinch, for under the EU's famously complex rules, they'll never be able to spend the money they've been promised. Poland, the largest new member state, for example, has not spent even five per cent of the 8.3 billion euros allocated to it for 2004-2006.

For his part, former Czech Ambassador to the EU Pavel Telicka, who served as the first-ever Czech EU Commissioner and was a principal negotiator in the lead-up to accession, says this is a bogus argument and will be soundly rejected by the new member states.

"In the first years of EU membership, the new members were getting used to the mechanics of spending and did encounter certain difficulties in spending the [allocated funds].... But I don't think this is a reasonable argument: we are talking about a period from 2007-2013 and if there were countries that were able to utilize, let's say, up to four percent of their GDP, well then I am sure that the Czech Republic is able to utilize funds around let's say 3.6 or 3.62 percent of the GDP of the Czech Republic, which was more or less the idea before these new proposals [of Mr Blair] started to be floated. So I think that this argument is a false one and will not fly."

Mr Blair will meet the leaders of the Baltic States in Tallinn on Thursday before taking his diplomatic tour to Budapest on Friday to debate the pending budgetary proposal with leaders from the four Visegrad countries -- Poland, the Czech Republic, Hungary and Slovakia. The British prime minister is due to make public his proposed cuts on the 5th of December, ahead of next month's EU Summit on the long-term budget.

Mr Blair wants an overall limit of 1.03 per cent of EU gross income on spending, instead of the previous 1.06 per cent proposal. That fraction of a percentage point translates into billions of euros. With little support for an early overhaul of the Common Agricultural Policy - a programme of farm subsidies which accounts for nearly half of the annual EU budget of some 100 billion euros - structural funds are a logical point to start cutting.

But former Czech EU commissioner Pavel Telicka says that Mr Blair's attempt to introduce such a significant eleventh-hour change as cutting aid to the new member states is very likely to fail.

"If this is seriously meant to be more or less the outcome of the Summit, then I'm afraid that - at least if I were taking part in the negotiations - Mr Blair would not succeed."

Mr Telicka declined to estimate what such cuts would mean to the Czech Republic in monetary terms, but stressed that the political fallout would be massive.

"Well, I think that we would have to see the proposals of Mr Blair in detail to calculate it, but it would be a sizable amount. I would first look at it not from a financial or fiscal point of view, and I would say it is not the Czech Republic but the European Union - and therefore the Czech Republic with it - losing in the eyes of the public, and I think that the union and the EU Presidency would be losing credibility - and I really don't think it would be politically wise to introduce changes at the expense of the new member states."