Dutch finance ministers have a reputation in Brussels: direct and not very diplomatic. Those who were in danger of forgetting this were reminded again on Thursday by Eelco Heinen (VVD). He responded sparingly to the latest interim position in the saga surrounding the next European budget: “The only positive thing about this proposal is that it shows how not to do things.”
Emphasizing differences is part of negotiations, everyone in Brussels knows. Especially when it comes to the multi-year budget that applies for seven years and where hundreds and thousands of billions are distributed in one agreement. Then you often step up your rhetoric to clarify your position. But Heinen’s words were not much taken into account: for the Netherlands and its frugal allies, the budget discussion threatens to move in the wrong direction in every way.
The proposal criticized by Heinen is the work of Cyprus. As rotating EU President, it had the task of kicking off the next round of discussions and finding a compromise between the divergent positions of the 27 EU capitals. A ‘landing zone’ in Brussels jargon.
According to critics, little has come of this. “This is not close to a landing zone,” said a diplomatic source who wished to remain anonymous. “This is so far removed from where we want to end up.” Another: “This is not a basis for a credible negotiation.”
Drastic renovation
Last year it still looked orderly. The European Commission launched its opening bid for the new budget in the summer, which sets out the distribution of the money from 2028 to 2035. The Netherlands was immediately strongly opposed to the size, which was higher than in previous EU budgets: more than 280 billion euros per year, 2,000 billion euros in total.
But there was something that the Netherlands did like. President Ursula von der Leyen had in mind a drastic overhaul of the budget. Less money would flow into many old sources such as agricultural subsidies and EU funds for poor regions, and much more into innovation and foreign policy. The budget for research was tripled, as was that for migration monitoring. And Brussels would more often impose conditions in exchange for subsidies.
Are we going to win the AI race or have more cows?
And now? A year later, there is hardly any smaller budget and major modernization is also faltering. The negotiating document drawn up by Cyprus, the so-called ‘negotiation box’ or ‘nego box’, cuts only 2 percent of Von der Leyen’s proposal. The frugal countries would have allowed a zero behind this. On Thursday, Heinen spoke mockingly of a “no-go box”.
The frustration in this group is even greater because the money is being diverted from the new funds that should increase the competitiveness and international role of the European Union. One of the diplomats sneers: “Are you spending your money on the future or on more of the same? Are we going to win the AI race or have more cows?”
Old funds
While frugal countries mourn, countries such as Spain, Italy and Poland see their wishes fulfilled. Sixteen countries have united in recent months as the ‘friends of cohesion’. They took to the barricades to maintain the old funds for regional and agricultural funds, formally called cohesion funds.
The Cypriot team that prepared the documents defended themselves on Thursday against accusations that it had been pressured by “generous countries”. This proposal also allocates significantly more money to research and competitiveness than in previous EU budgets, emphasized Marilena Raouna, the Cypriot State Secretary for European Affairs. And the amount of money for agriculture and regions is still shrinking, both relatively and absolutely.
But for the group of frugal countries – which are now trying to market themselves as ‘modernizers’ – the trenches have only become deeper after this week. As net contributors, they have always been keen to reduce an overly large budget. Now, partly thanks to Von der Leyen’s major plans, the desire for far-reaching reforms has been added.
Hard core
There is still time. An agreement is not expected before the end of this year, and probably only next year. But in the frugal countries the question is now being raised whether their approach is effective. The fact that Von der Leyen has already partly backtracked since presenting her plans, by committing more money for farmers and regions, reinforces that feeling.
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In addition to the Netherlands, the hard core of this group consists of Denmark, Germany, Finland, Austria and Sweden. France and Belgium are also involved in discussions, although their position is more complicated. They are more sympathetic to additional taxes or even joint loans than the rest, but at the same time are forced to be more frugal than before due to their own tight budgets.
Ireland, which will soon take over the gavel from Cyprus, is also included, but Dublin cannot speak out as loudly because of its upcoming role.
The main question is how countries ‘in the middle’ will speak out if the negotiations really get going. For example, the Baltic countries supported the initiative of the Cohesion Friends, but they are also considered sympathizers with the frugal countries. And a country like Poland will at some point become a net payer from a net recipient. That prospect can also influence relations.
Moreover: diplomats from the frugal camp gently remind that although their club is numerically in the minority, they do form a larger part of the European economy – and therefore also of the EU budget. “We make a huge contribution to the budget,” said one of them. “We are making a huge contribution to Ukraine. We are doing our part.”