WHAT HAS HAPPENED
The EU's annual budget for 2011 was vetoed last night. It is the first time that this happens since 1985 and is due to the European Parliament’s miscalculations in the negotiations on the Lisbon Treaty.
Under the Lisbon Treaty, the European Commission proposes the budget, which has to be actively agreed along with any amendments by both the Council of Ministers and the European Parliament. Either side can block agreement. In the case of the Council, it is merely a matter of finding a large enough minority of governments to block a qualified majority from being able to form.
WHY HAS THIS HAPPENED?
The Parliament and the 27 governments in the Council could not agree on future principles in the EU budget. Next year, negotiations begin on the EU’s multiannual budget for the years 2014 to 2020. For the 2011 annual budget, Parliament proposed an increase in spending of 5.9% as a negotiating tactic. The Council would not go higher than 2.9%, a figure Parliament would accept in return for being guaranteed a greater role in formulation of the budget. In essence, Parliament failed in inserting a cheeky amendment to change the rules in its attempt to empower itself.
This is unfortunate for the Parliament which had convinced itself that it gained power over the budget under the Lisbon Treaty, while the opposite is true.
WHAT IS THE NEXT STEP?
The budget process for 2011 re-starts from scratch. The Commission must make a new (or the same) proposal, which will need to be approved by the Council and the Parliament. Until or unless there is agreement, from 1 January a “one-twelfth” budget based on the monthly amounts for 2010 will be approved, amended or rejected by the Council on a month-by-month basis. The Parliament will have the power only to reduce spending on a monthly basis, which may happen if it chooses to sabotage national government spending priorities, for example in the field of the Common Security and Defence Policy, as a negotiating tactic. A period of budgetary uncertainty lies ahead.
WHY IS THE PARLIAMENT TO BLAME?
Parliament gained a lot of power from the Lisbon Treaty by insisting on becoming the equal legislative partner of the Council on everything including the budget. But here it made a mistake for in annual budgetary matters it previously had more power than the Council and should not have wanted to change anything. In the event that Council and Parliament could not agree, each side would be able to overrule the other on certain areas of spending. Council could force amendments past the Parliament on agricultural and foreign policy spending, while Parliament could do the same to Council on almost everything else. An overall power of veto resided with the Parliament but required a two-thirds majority of MEPs. A veto was therefore most unlikely while unilateral amendments were easy to pass.
Compare that to the new rules where Council and Parliament must agree on everything and we see that vetoes are easier and amendments are more difficult.