EU to boost handouts to poor regions - but in the right places?
The European Commission has proposed keeping regional subsidies for poor regions in existing member states. Their spending plans for 2007 to 2013 would see only 41 percent of EU handouts go to the new members, while the current club of 15 current countries would get a 51 percent share - despite its higher living standards. Kerry Skyring asked Heather Grabbe from the Center for European Reform - is this fair?
But they must also have an interest in having the European Union budget increased, as the Commission wants and as some of the existing member states like Austria, Britain and others are arguing against. Who's going to win this argument on the overall budget?
"This is one of the biggest fights in the Union at the moment. Six of the member states, the overall contributors, have said they would like to reduce the size of the budget down to 1.0 percent of GDP and in fact one of the new member states, Slovenia, thought quite carefully about joining this group, because they are likely to become a net contributor quite shortly after they join the union. They're relatively rich with GDP per head levels similar to those of Greece, but in the end they decided they had to stick to solidarity with the new member states. So it's a tricky issue because it very much divides the net contributors from the net recipients. I suspect that what will happen in the end is that there will be a reduction in the overhead ceiling, probably not down to 1 percent but probably not as high as the Commission's 1.24 percent proposal which came out last month."
I wonder, Poland and these new member states, and Poland certainly has a track record of arguing it's corner - they could veto this budget until they get a better deal - do you see that happening?
"I think some of the countries could be quite belligerent. As you mentioned Poland is already gearing up for quite a tough fight and it's going to be a very lively and combatant new member of the Union, but there are many older member states who have many decades of experience behind them on being tough on the budget as well. France is extremely good at blocking a deal until it gets its way and Spain is also very vociferous on the other side in demanding more money. So I think what we will see is a very lengthy negotiation and it may finally get settled under the British Presidency in the second half of 2005."
It will be complex and there are many political subtleties, I just wonder if that will be appreciated on the streets of Bratislava and Budapest? Isn't this going to be difficult to sell in terms of public perception in Central Europe?
"Definitely it is because there is already a perception in Central and Eastern Europe that they got a bad deal in the accession negotiations, whereas now they are in a very different position. They have a lot more power and they have a much bigger domestic consensus in favour of having a tough position. So I think the new members are not going to be pushovers in the budget because their domestic publics will be demanding that they be tough and that's always the best incentive for a politician to go into a negotiation with a very hard line."
