EU Budget Veto 2011: what, why, and where next?
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.
Dr Giacomo Benedetto
8 Comments
Reader Comments (8)
Sir I hope this is not an official CEP paper for it is inaccurate as far as the new budgetary procedure is concerned .
As for the extra budgetary political wrangle that caused the deadlock , it appears that a majority of member states agreed with the EP proposals on principles of negociation for future pluriannual spending and own ressources . But 3 member states vetoed the agreement .
It remain to be explained why unanimity was required for the Council to agree to these principles ...
Take a look at article 314 of the TFEU (Lisbon Treaty) and the Benedetto and Hoyland article from Septmeber 2007 in the Journal of Common Market Studies. To approve the annual budget unanimity in the Council was not required, only a qualified majority. Three member states may nevertheless have prevailed in opposing an agreement if they raised the stakes in the Council. Often the Council does not take a decision if unanimity lacks even when the option to outvote a minority exists as in this case.
Very true: In effect, under Nice, the EP alone had the ability to block the annual budget. Under Lisbon, the Council has regained that power, through the possibility of a blocking minority ensuring a deal cannot be reached in the conciliation committee.
But this episode is simply part of the great game of interinstitutional rivalries, as each tries to maximise its hand in the hammering out of the post-Lisbon paramaters.
On the question of why unanimity was required in the Council, the negotiations also covered the "Lisbonisation" of the multiannual financial framework, for which unanimity is required.
Specifically, it appears from reports that while the EP wanted to amend the framework for the remaining years up to 2013, to increase the threshold up to which QMV applies for changes to the figures in the framework, the UK wanted to see it lowered. (At present, changes of less than 0.03% of EU GNI (ca 350 million euros) do not require unanimity in Council.)
In addition, the EP wanted the Council to sign up to a joint declaration which would bind the Council in the future as regards areas on which unanimity is required.
Under your "next step" point, the provisional twelfths procedure is automatic (and was also in the past). The EP only has the opportunity to reduce spending in cases in which the Council has decided to spend more than one twelfth in a given month, on the basis of a Commission proposal.
Thanks for your comments.
I can see that the EP's position was unacceptable to the Council. Either its proposals were too closely linked to the multiannual financial framework and therefore required Council unanimity for acceptance - or - from my reading, the EP was attempting to initiate new budgetary legislation via amendments. Under the codecision procedure the EP has a history of doing this. If it's the latter it may well have been unacceptable to a blocking minority in the Council, which would have required more than three member states.
Concerning what happens next with the monthly budgets under provisional twelfths, you are quite correct. The EP only has the power to make cuts or block increases in all areas of spending. Previously, it had the power to cut or raise spending in areas other than agriculture and foreign policy. This allowed it to veto the budget and yet safeguard its own spending priorities on a monthly basis by increasing the relevant headings against the wishes of the Council. Compared to the old article 273, Lisbon's article 315 removes this power.
I think you're right in regards to the concensus issue between the parliament and the council. I fear this is just another self-imposed hurdle we'll have to get over in order to find the right balance of power throghout the European governing mechanism.
OK, on 15 December the EP voted to pass the annual budget at its first reading without amending the Council's text. Apparently in its only reading of the re-introduced budget Council made some concessions on the negotiations for the multiannual framework that begin next year.
very interesting article, i always wanted to write my own blog but i don't have much time
regards
This is a great example of how important the budget is these days. You made some good points about what lies ahead and that they have to start from scratch = hard work here we come!