The Next Multiannual Financial Framework: From National Interest to Building a Common Future

The Next Multiannual
Financial Framework:
From National Interest to
Building a Common Future
Stefaan De Corte, Nico Groenendijk, Corina Suceveanu,
Paweł Tokarski and Patryk Toporowski

C E S

C E S
The Next Multiannual Financial Framework

CREDITS

Centre for European Studies
Typesetting & Cover: Andreas Neuhaus, PEPATO|GROUP
Printed in Kortrijk (BE) by Jo Vandenbulcke
Centre for European Studies
Rue du Commerce 20
Brussels, BE – 1000

The Centre for European Studies (CES) is the political foundation of the European People’s
Party (EPP), dedicated to the promotion of Christian Democrat, conservative and like-minded
political values.

For more information please visit:
www.thinkingeurope.eu

This publication receives funding from the European Parliament.
© Centre for European Studies 2012
The European Parliament and the Centre for European Studies assume no responsibility for
facts or opinions expressed in this publication or their subsequent use. Sole responsibility lies
on the authors of this publication.

C E S

C E S

About the Centre for European Studies

The Centre for European Studies (CES), established in 2007,
is the political foundation of the European People’s Party (EPP).
The CES embodies a pan-European mindset, promoting
Christian Democrat, conservative and like-minded political
values. It serves as a framework for national political
foundations linked to member parties of the EPP, with 21
foundations currently members. The CES takes part in the
preparation of EPP political platforms and programmes. It
organises seminars and training on EU policies and on the
process of European integration.

The CES also contributes to formulating EU and national
public policies. It produces research studies and books,
electronic newsletters, policy briefs, and the twice-yearly
European View journal. Its research activities are divided into
six clusters: party structures and EU institutions, economic
and social policies, EU foreign policy, environment and
energy, values and religion, and new societal challenges.
Through its papers, conferences, authors’ dinners and
website, the CES offers a platform for discussion among
experts, politicians, policymakers and the European public.

2

C E S

Table of contents

Table of contents .......... 03

Executive summary .......... 05

1. General introduction .......... 10

2. The European Commission’s proposal .......... 12

3. The European Parliament’s view .......... 20
Introduction .......... 20
Assessment of the European Commission’s
proposal from the European Parliament’s
perspective .......... 22
Summary .......... 30

4. The Polish view .......... 32
proposal from the Polish perspective .......... 34
Summary .......... 51

5. The Dutch view .......... 53
proposal from the Dutch perspective .......... 56
Summary .......... 65

3

C E S

6. General conclusions and
recommendations .......... 67

About the authors .......... 75

Acknowledgments .......... 77

Bibliography .......... 78

Keywords
Budget – Cohesion policy – Common Agricultural Policy –
Council – European Commission – European Parliament –
Inclusive growth – Multiannual Financial Framework –
Netherlands – Own resources – Poland – Smart growth –
Sustainable growth

4

C E S

Executive summary

The Multiannual Financial Framework (MFF) is the budget
of the European Union and the most important tool to
finance common policy areas, actions and strategies. Upon
a proposal from the European Commission, it has to be
approved by the majority of the members of the European
Parliament, before it can be unanimously adopted by the
Council. Furthermore, the Own Resources Decision has
to be adopted with unanimity within the Council and be
ratified by all 27 Member States in accordance with their
constitutional requirements.

Reaching an agreement between the three negotiating
institutions will not be straightforward, as views on the
development of the financial resources of the European
Union diverge considerably. Nevertheless, a decision has to
be taken by the end of 2012 in order to be able to implement
the new MFF properly.

With this paper, the Centre for European Studies contributes
to the debate. The paper describes the European Commission’s
proposal, the European Parliament’s resolutions on the
topic as well as the positions of two Members of the Council.
In addition, the paper sheds light on where the positions
differ and where there is common ground and room for
compromise.

5

C E S

In June 2011, the European Commission issued a
communication titled A Budget for Europe 2020, in which it
proposed a new MFF 2014–2020 having an overall amount
of €1,025 billion or 1.05% of the EU GNI in commitments
and €972.1 billion or 1% of the EU GNI in payments. It
suggested a decrease of the cohesion policy, concentrating
on the poorer and the weakest regions, and also the
introduction of a new category: transition regions. Market-
related expenditure and direct payments within the Common
Agricultural Policy (CAP) would decrease. Furthermore,
resources should be reallocated to priority areas such
as pan-European infrastructure, research and innovation
(competitiveness), education and culture, securing the EU’s
external borders and external relations policy priorities such
as the EU’s neighbourhood policy (ENP). Last but not least,
a proposal was put forward to simplify the current system of
rebates and corrections.

The European Parliament set out its position and priorities
on the next MFF in its resolutions from 2007 (own
resources) and 2011 (MFF). It first of all strongly favours
the introduction of own resources in accordance with the
Lisbon Treaty; however, the Parliaments’ resolution does
not put forward a concrete proposal in this regard. The
European Parliament furthermore opts for an increase of the
total level of the Multiannual Financial Framework to at least
1.11% GNI, and emphasises the need to achieve growth
and competitiveness within the EU. This is why areas like
research and development should receive more resources.

6

C E S

Last but not least, the EP calls for a more efficient budget,
to be achieved by simplifying rules, mechanisms and
instruments of the different policy areas, and through more
focus on result orientation.

The Polish view on the next MFF is to some extend similar
to that of the European Parliament, as it acknowledges
the need for a proper level of resources. Poland is against
spending cuts, demanding that the size of the budget should
not be less than 1.12% of EU GNI, or at least kept at the
level of 2013, with the needed adjustments due to inflation.
An ambitious cohesion policy is needed especially in times
of crisis; therefore, the proposed capping at 2.5% of GNI is
seen as too low. Poland opts for strengthening the second
CAP pillar, restructuring rural areas, as well as a decoupling
of the system of payments from historical production
volumes. It also asks to avoid reducing the discussion on the
budget to the particular interest-driven logic of balance of
payments. Therefore, the EU needs to have its genuine own
resources as required by art. 311 of the Treaty. Moreover,
Poland considers the fairest decision to be that none of the
Member States receives a rebate.

Decisive for the Dutch government during the upcoming
negotiations will be the net position and the magnitude of
correction the Netherlands will receive in net terms. The
proposed gross annual reduction of €1,050 million for the
Netherlands should be increased in such a way that the
Dutch net position improves with €1 billion annually. In the

7

C E S

Dutch view, the MFF 2014–2020 should be nominally frozen
at the 2013 level. Compared to the EC proposal there should
be less spending on cohesion policy, which means that
support should only be given to the poorest regions in the
poorest Member States. However, this position is not shared
by Dutch regional and municipal authorities, who are in
favour of an EU-wide cohesion policy. Also, the introduction
of new own resources is not needed, as the power to
tax should stay a matter of national sovereignty, and all
proposed off-MFF expenditure should be part of the MFF
and therefore integrated into the annual EU budget.

It can be concluded that both the European Parliament
and the Council accepted the Commission’s proposal as
the basis for the negotiation. However, only the EP has an
official position at this time; therefore, it would facilitate
the negotiation between the various institutions if the
Council would formulate a clear and detailed opinion on the
European Commission’s proposal.

When speaking about the overall level of the budget, the
European institutions (European Council, European Parliament
and European Commission) should keep the long-term strategic
objectives and interests of their citizens in mind in reflecting on
an adequate level of funding for policies developed at the EU
governance level.

The analysis shows that all parties agree that the current
MFF needs to be changed to respond to new EU priorities

8

C E S

and that the EU 2020 strategy for smart, sustainable and
inclusive growth forms a good compass for this reflection.
This reprioritisation will imply, though, choices between
various headings as well as regions.

As there is also support for a more result-oriented approach
towards projects and policies financed with the EU budget,
the proposal of the Commission to conclude partnership
contracts covering all EU funds under shared management
should be used to the full. In the same context, one should
implement strictly the proposed conditionality mechanism,
which could give rise to the suspension of funding based on
a comprehensive set of ex ante-defined results.

Last but not least, it is hard to explain to citizens that the EU
institutions do not respect all the provisions of the Treaty.
Therefore, the institutions might agree to introduce an own
resource step by step.

9

C E S

1. General introduction

In the upcoming months, negotiations will take place on
the next Multiannual Financial Framework (MFF) between
the European Commission (EC), the European Council and
the European Parliament (EP). To be implemented properly,
the new MFF should be adopted before the end of 2012.
The MFF 2014–2020 has to be proposed by the European
Commission and unanimously adopted by the Council, after
it has been approved by a majority within the European
Parliament. The Own Resources Decision 2014–2020 also
requires unanimity in the Council (after consultation with
the EP), in addition to which it has to be ratified by all 27
Member States in accordance with their constitutional
requirements.

Reaching an agreement between the three negotiating
institutions will not be easy, as views on the development
of the financial resources of the European Union diverge
considerably. With this paper, the Centre for European
Studies contributes to the debate on how the next MFF
might look.

In the paper, different authors described the European
Commission’s proposal and the European Parliament’s
position. As the European Council has not yet decided a
negotiating position, the paper brings forward the views of
two Member States, the Netherlands and Poland, which

10

C E S

could be seen as representative of a group of Member
States. The authors of the different sections relied on
official documents, statements and interviews for their
research. The paper ends with general conclusions and
recommendations which bring forward a view on what a
compromise on the next Multiannual Financial Framework
might look like.

11

C E S

2. The European Commission’s
proposal

Nico Groenendijk

In June 2011 the European Commission issued a communication
on A Budget for Europe 2020, in which it proposed a new MFF
2014–2020.1 This proposal followed on an extensive round of
consultation,2 and was supported by publications by EC
working groups on the own resources system3 and on the key
options on the main horizontal and sectoral issues.4

Tables 1 and 2 give an overview of the EC proposal. Table 1
shows the amounts to be appropriated to the various headings
for the years 2014–20. Table 2 compares the proposed MFF
2014–2020 with the current MFF 2007–2013. Both tables use
2011 prices, meaning that they show increases and decreases
in real terms.

1 European Commission, A Budget for Europe 2020, COM(2011) 500 final (29 June 2011), part I
and part II.
2 European Commission, Reforming the Budget, Changing Europe. A Public Consultation

Paper in View of the 2008/2009 Budget Review, SEC(2007) 1188 final, followed by European
Commission, The EU Budget Review, SEC(2010) 700.
3 European Commission, Financing the EU Budget: Report on the Operation of the Own Resources

System, Commission Staff working paper, annex to COM(2011) 500 final.
4 European Commission, A Budget for Europe 2020: the Current System of Funding, the

Challenges Ahead, the Results of Stakeholders Consultation and Different Options on the Main
Horizontal and Sectoral Issues, Commission Staff Working Paper, SEC(2011) 868 final.

12

C E S

The overall amount proposed for 2014–20 is €1,025 billion or
1.05% of the EU gross national income (GNI) in commitments
and €972.1 billion or 1% of the EU GNI in payments. In
percentage of GNI the MFF 2014–2020 shows a decrease
compared to the MFF 2007–2013 (from 1.12% to 1.05%).
In absolute terms, compared to the current MFF, there is an
overall real increase of 3.2%. Expenditure on cohesion policy
will decrease, as will market-related expenditure and direct
payments within the Common Agricultural Policy (CAP). The
EC proposes to reallocate resources to priority areas such
as pan-European infrastructure, research and innovation
(competitiveness), education and culture, securing the EU’s
external borders and external relations policy priorities such as
the EU’s neighbourhood policy.

13

Table 1. European Commission’s proposal Multiannual Financial Framework (EU-27)
EUR million - 2011 prices

14
COMMITMENT APPROPRIATIONS 2014 2015 2016 2017 2018 2019 2020 Total 2014–2020
C

1. Smart and Inclusive Growth 64,706 66,588 68,138 69,957 71,594 73,763 76,163 490,909
Economic, social and
territtorial cohesion 50,468 51,543 52,542 53,609 54,798 55,955 57,105 376,020
E

2. Sustainable Growth:
Natural Resources 57,833 56,759 55,707 54,670 53,660 52,665 51,633 382,927
Market-related expenditure
S

and direct payments 42,691 41,854 41,304 40,229 39,400 38,667 37,909 281,825
3. Security and Citizenship 2,532 2,571 2,609 2,648 2,687 2,726 2,763 18,535
4. Global Europe 9,400 9,465 9,845 9,960 10,150 10,380 10,620 70,000
5. Administration 8,542 8,679 8,796 8,943 9,073 9,225 9,371 62,629
Administrative expenditure

of the institutions 6,967 7,039 7,108 7,191 7,288 7,385 7,485 50,464

TOTAL COMMITMENT
APPROPRIATIONS 143,013 144,241 145,094 146,179 147,164 148,758 150,511 1,025,000
of GNI 1.08% 1.07% 1.06% 1.06%
as a percentage 1.05% 1.04% 1.03% 1.05%

TOTAL PAYMENT APPROPRIATIONS 133,851 141,272 135,506 138,384 142,228 142,894 137,966 972,102
of GNI 1.01% 1.05% 0.99% 1.00%
as a percentage 1.01% 1.00% 0.94% 1.00%

Margin available 0.22% 0.18% 0.24% 0.23% 0.22% 0.23% 0.29% 0.23%
Own resources ceiling
of GNI 1.23% 1.23% 1.23% 1.23%
as a percentage 1.23% 1.23% 1.23% 1.23%

MFF 7,815 Outside the 8,583 8,306 8,357 8,395 8,445 8,416 58,316
of GNI 0.06% 0.06% 0.06% 0.06%
As percentage 0.06% 0.06% 0.06% 0.06%
Total commitments appropriations
MFF 150,371 152,585 153,391 154,725
+ outside the 155,739 157,372 159,134 1,083,316
of GNI 1.13% 1.13% 1.12% 1.12%
As percentage 1.11% 1.10% 1.09% 1.11%

Source: European Commission, A Budget for Europe 2020, COM(2011) 500 final, 6.

C E S

Table 2. Comparison MFF 2007–2013/2014–2020

EUR billion - 2011 prices

COMMITMENT APPROPRIATIONS 2007 - 2013 2014 - 2020 Difference in %

1. Smart and Inclusive Growth 445.5 490.9 10.20%
Competitiveness 77.8 114.9 47.70%
Infrastucture 12.9 40.0 209.70 %
Cohesion policy 354.8 336.0 -5.30 %
2. Sustainable Growth: 421.1 382.9 -9.10%
Market-related expenditure
and direct payments 322.0 281.8 -12.50%
3. Security and Citizenship 12.4 18.5 49.90%
Freedom, security and justice 7.6 11.6 53.00%
Freedom, security and justice 4.8 6.9 44.90%
4. Global Europe 56.8 70.0 23.20%
5. Administration 56.9 62.6 10.10%
Administrative expenditure
of the EU institutions 48.4 50.5 4.20%
6. Comparison 0.9

TOTAL APPROPRIATIONS 993.6 1,025.00 3.20%
GNI
In % of EU-27 1.12% 1.05%

Source: European Commission, the MFF 2014–2020
(press conference presentation, 30 June 2011).

Below, the various headings are discussed in more detail.

Relating to the first heading, Smart and Inclusive Growth, the
EC proposal introduces Horizon 2020 as the new framework
for research and innovation. Existing programmes for small and
medium-sized enterprises (SMEs), and in the fields of education
and youth, will also be streamlined. As far as infrastructure is
concerned, a new facility is introduced: Connecting Europe.
In cohesion policy expenditure will be more concentrated on

15

C E S

the poorer and weakest regions, that is, the less developed
regions, with a GDP per capita below 75% of the EU average.
A new category of regions is introduced: transition regions,
with a GDP per capita between 75% and 90% of EU average.
Cohesion support per Member State will be capped at 2.5% of
the Member State’s GNI, to keep support in line with absorption
capacity.

Concerning the second heading, Sustainable Growth:
Natural Resources, the EC proposes to refocus the Common
Agricultural Policy on its core and new activities and to bring
it more fully inside the Europe 2020 strategy. It takes out of
the CAP some expenditure that belongs in other policy areas/
headings. It retains the basic two-pillar structure of the CAP, but
proposes changes to the system of direct payments, 30% of
which will be made conditional on ‘greening’ (i.e. linking support
to environment measures). In addition, the levels of direct
support per hectare will be progressively adjusted to ensure
a more equal distribution of direct support. Member States
with direct payments above the EU average will contribute
(proportionally) to this adjustment. Generally, the level of direct
payments will be capped for large agricultural holdings. As far as
rural development is concerned, the European Agricultural Fund
for Rural Development will be included in the common cohesion
policy framework for all structural funds. First-pillar expenditure
(amounting to €282 billion for the 2014–20 period) will be
nominally decreased compared to the current MFF (€322 billion).

16

C E S

Regarding the third heading, Security and Citizenship, the EC
proposes to streamline current instruments into two new funds:
one for migration and asylum and one for internal security and
external border control.

As far as the fourth heading, Global Europe, is concerned, the
EC proposes a significant increase in expenditure by making
available (for the entire 2014–20 period) €70 billion from the
EU budget and by drawing €30 million from the European
Development Fund (EDF). It introduces a single, integrated pre-
accession instrument, a new partnership instrument to replace
programmes in industrialised and emerging countries, and a
pan-African instrument to support the implementation of the joint
Africa–Europe strategy.

In terms of Administration (the fifth heading), the EC proposes
major changes to the current staff regulations, aimed at a
reduction of the number of EU staff by 5%, combined with an
increase in working time of staff of 2.5 hours per week (i.e. to 40
hours a week), without compensatory wage adjustments. Still,
growth of administrative expenditure is foreseen for 2014–20, in
real terms.

In addition, some expenditure will take place outside the MFF:
• Flexibility instruments which are not programmable
(Emergency Aid Reserve, European Globalisation Adjustment
Fund, Solidarity Fund, Flexibility Instrument) are not part
of the MFF, but, if used, they will enter into the annual EU
budget.

17

C E S

• The European Development Fund has a financing key that is
different from the MFF and does not enter into the annual EU
budget, although such integration of the EDF into the regular
budget should be made possible after 2020, and the EC
proposes to make the necessary preparations during the next
MFF period.
• ITER (International Thermonuclear Experimental Reactor) and
GMES (Global Monitoring for Environment and Security) are
not included because of their large scale and the involvement
in these projects of non-EU actors.

All expenditure outside the MFF could amount to a maximum
0.06% of the EU GNI.

As far as the financing of the EU budget is concerned, the EC
proposes a reform of the own resources system, based on the
elimination of the current VAT-based own resource and the
introduction of two new own resources:
• an own resource based on part of the proceeds of a new EU-
wide financial transaction tax (FTT); and
• a new VAT own resource, by which the current VAT is shared
between the EU and the Member States, by combining an
EU VAT rate and national VAT rates. This new VAT resource
should more clearly link EU policies and the EU VAT revenues
and should not have an impact on the current VAT levels.

Reduction of the direct contributions from Member State
budgets is foreseen by reducing the scale of the GNI-based
resource. The EC proposes to simplify the current system of

18

C E S

rebates and corrections by going back to the Fontainebleau
agreement of 1984, which limits contributions only of those
Member States that would otherwise face a budgetary burden
which is excessive in relation to their relative prosperity, rather
than trying to balance Member States’ payments to and
receipts from the EU budget.5 The current UK rebate and other
corrections will be replaced by lump-sum gross reductions on
GNI payments. Four Member States (Germany, the Netherlands,
Sweden and the United Kingdom) will benefit from such a
reduction for the period 2014–20.6 The current correction that
is hidden in the 25% retention of collection costs for traditional
own resources will be restricted to 10%, as it was before.

5 European Commission, Proposal for a Council Decision on the System of Own Resources of the
European Union, COM(2011) 510 final.
6 Annually, this gross reduction amounts to €2,500 million for Germany, €1,050 million for the
Netherlands, €350 million for Sweden and €3,600 million for the United Kingdom. Because the
loss of revenues due to these corrections has to be covered by all Member States (including
those Member States that get a reduction) net reductions are lower (e.g. in the case of the
Netherlands, €750 million annually).

19

C E S

3. The European Parliament’s view

Corina Suceveanu

Introduction

The Special Policy Challenges Committee within the European
Parliament prepared the Parliament’s position on the next
Multiannual Financial Framework in view of the negotiations
with the Council.

The work of this committee was divided into three phases
covering the period from July 2010 to June 2011. It concentrated
mostly on discussions on technical and horizontal issues and
on specific policy priorities within the budget.7 It then ended
with negotiations on a common EP position and the final vote
on a European Parliament resolution of 8 June 2011, Investing
in the Future: A New Multiannual Financial Framework (MFF)
for a Competitive, Sustainable and Inclusive Europe.8 The work of
the European Parliament on some particular issues of the budget
started even earlier, as demonstrated by the resolution on the
future of the European Union’s own resources,9 prepared by
the Committee on Budgets, which was adopted in 2007.
7 ‘The Battle for the EU’s Long-term Budget’, European Parliament/News, accessed at
http://www.europarl.europa.eu/news/en/headlines/content/20110429FCS18370/html/The-
battle-for-the-EU%27s-long-term-budget on 1 February 2012.
8 European Parliament, Investing in the Future: A New Multiannual Financial Framework (MFF)
for a Competitive, Sustainable and Inclusive Europe, Resolution (8 June 2011), accessed at
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2011-
0266+0+DOC+XML+V0//EN on 1 February 2012.
9 European Parliament, On the Future of the European Union’s Own Resources, Report
(14 March 2007), accessed at http://www.europarl.europa.eu/sides/getDoc.do?type=
REPORT&reference=A6-2007-0066&language=EN#title4 on 1 February 2012.

20

C E S

The EP’s position on the next Multiannual Financial Framework,
as well as on the Union’s own resources, is of increased
importance, as the entry into force of the Lisbon Treaty led to
major changes of inter-institutional cooperation and decision
making. As described in the introduction of this paper, the MFF
will be a regulation adopted by the Council, with consent of the
European Parliament.10

The short- and long-term challenges the EU is facing, like,
for example, growth and competitiveness or climate change,
influenced the preparation of the European Parliament’s position.
They represent, together with the fields of employment, research
and development, energy, education and poverty reduction,
policy priorities for the coming years. According to the European
Parliament, these policy priorities demand additional financing,
and this should be taken into consideration within the next MFF.

For the EP, the entry into force of the Lisbon Treaty and the
additional EU competences derived from it will as well require
additional appropriations. As an example, the EP highlights
the field of common foreign and security policy, which includes
both the European External Action Service and the European
Neighbourhood Policy. Therefore, an adjustment of the budget
becomes inevitable.

In addition to this there are several lessons to be learned from
the current MFF, as the first budgets of the 2007–13 MFF
have illustrated the capacity limits of the financial framework
10 European Union, Treaty of Lisbon, art. 312, paragraph 2, accessed at
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:EN:PDF
on 1 February 2012, 183.

21

C E S

to respond to new commitments, like Galileo, ITER or the
Economic Recovery Plan.

The economic crisis has also had a major impact, demanding
a strong response and many measures not only from the Union
but also from its Member States.

Last but not least, EU citizens have become more demanding,
and at the same time more critical, about the actions taken by
the Union.

proposal from the European Parliament’s
perspective

Size and length of the MFF 2014–2020

Concerning the discussion on the size of the MFF, the
European Parliament emphasises that the overall level of
the budget, which consists at its current overall level of 1%
of gross national income, is not able to cover all financial
needs, especially the additional ones arising from the Treaty.
Therefore, it is of the firm opinion that freezing of the budget at
the 2013 level (1.06% of GNI) is not an option, and demands
an increase of the resources of at least 5% compared to the
2013 level at constant prices (the proposal is for an increase
of at least 1.11% of GNI).
When it comes to the length of the budget, the EP opts for

22

C E S

an alignment of the duration of the MFF with the five-year
political cycles of both the Parliament and the Commission.
However, the best solution for the moment remains the seven-
year cycle, as it provides more stability, and it makes the link to
the Europe 2020 strategy. The possibility of opting for either a
five- or a ‘5 + 5’-year cycle should, according to the Parliament’s
resolution, be considered instead for the post-2020 period.

Financing the MFF: own resources, corrections and rebate

A very important aspect for the European Parliament is the
financing of the MFF. Here the institution emphasises that,
according to the Lisbon Treaty (art. 311 of the Treaty on
the Functioning of the European Union, TFEU), the budget
should be financed wholly from own resources. Therefore, it
strongly calls for an in-depth reform of EU resources.

The main aim of this reform should be the achievement of a
financing system of the Union that can be at the same time
autonomous, fairer, more transparent and also simpler and
more equitable. In this context the EP demands an ending
of existing rebates, exceptions and, last but not least,
correction mechanisms.
It has to be mentioned that in its resolution from 2011 the
Parliament emphasises the need of own resources, but
does not put forward a clear position on its preferred option.
However, it states that the financial transaction tax (FTT)
could have a substantial contribution to the whole.

23

C E S

A change demanded by the Parliament regards also its own
role in this matter. It underlines the fact that the European
Parliament is the only one of its kind that has a say on the
expenditure side, but not on the revenue side, a situation
that has to change.

The various expenditure headings

1A. Smart growth

The next MFF should, as stated in the resolution, concentrate
more on areas that stimulate both growth and competitiveness,
for example, research and development (R&D) and other forms of
innovation. The Parliament thinks, too, that increasing expenditure
especially in this area could be of added value to the EU and would
also be in line with the Europe 2020 agenda, where the target is
to reach 3% of GDP expenditure on R&D. This would reinforce the
creation of a European Research Area and of an ‘Innovation Union’.

Other areas of importance are industry and SMEs. A strong
and diversified industry is needed to achieve the EU’s 2020
objectives. As SMEs are key drivers not only of economic growth
and competitiveness but also of innovation and employment,
they should also be considered a priority, and be strongly
supported. The European Parliament demands, therefore,
enhanced support in the next MFF for all programmes and
instruments used for SMEs.

24

C E S

Furthermore, the Union’s Digital Agenda should be executed, and
the EU space policy should receive more attention and funding.

The focus should be on the citizens, as well, especially when
it comes to helping them to achieve the right skills for jobs,
taking into consideration the EU’s failure to properly invest in
education and life-long learning.

Last but not least, the EP refers in this part of its resolution to the
financial needs to achieve a connected Europe. This concerns
the areas of transportation and energy infrastructure, as well
as tourism and maritime policy, where innovative financial
instruments are needed to allow public and private investments
in the long term.

1B. Inclusive growth: cohesion policy

For the European Parliament, cohesion policy is one of the most
significant and successful policies of the EU. However, the EP
acknowledges that for achieving a modern cohesion policy a
number of structural reforms are needed.

First and foremost, the cohesion policy rules and procedures
have to be simplified, as they are far too complex. Second,
reform is needed to enable this policy to respond to the main
challenges of the Union and to enable an increase in synergies
with other policies and instruments.

25

C E S

With regard to simplification, the Parliament calls first for an
improvement of the monitoring and evaluation system, as the
implementation part of the cohesion policy has often been
criticised as making use of unnecessarily complex rules. The
EP stresses that to be successful in this respect, it is important
to apply the partnership principle.11 However it warns against
the use of sanctions in the framework of macroeconomic
conditionality.

To respond to the Union’s main challenges, the EP calls
for a stronger thematic concentration of cohesion funding
according to the Europe 2020 priorities, for a smaller number
of priorities, and for the possibility of cross-financing. In this
way the policy could become more transparent and effective.

In line with all the above, suitable funding is necessary, which
in the view of the Parliament means that the current level of
financing for this policy area should be at least maintained for
the next period and be available to all the regions of the EU.
When it comes to unspent resources of this fund, the EP
suggests keeping them in the budget, and not returning them
to the Member States.

11 The partnership principle in the European Parliament’s resolution refers to the partnership
contracts which have been proposed by the European Commission. These are contracts
between the Commission and each Member State, and set out commitments within the
cohesion policy for partners at both regional and national levels and the Commission. They
would furthermore contain the strategies for territorial development, strategic investments
and conditionalities. The progress would then be followed up in annual reports on cohesion
policy.

26

C E S

2. Sustainable growth: natural resources

In stressing the important role of the Common Agricultural
Policy, the European Parliament calls for the Commission to
present proposals on how to reform the existing policy. It also
asks for a simplification of the implementation mechanism.
At the same time it supports the maintaining of a two-pillar
system and insists all in all on keeping the amount allocated
for the CAP during the next MFF period at the same level as
for the 2013 budget.

Further areas that are considered to be important for sustainable
growth are energy and the environment. Concerning the first,
the European Parliament supports the idea of increasing
energy’s share in the next MFF and regards energy efficiency
and energy saving, together with renewable energy technologies,
as key priorities of the Union. The target should be to make
sustainable energy available for all.

As for environmental policy, the EP stresses that the EU has
a global responsibility to tackle climate change, and therefore
it should be monitored whether the 20/20/20 climate and
energy objectives have been achieved.

3. Security and citizenship

In the area of security and citizenship the EP notes that
the share of funding is relatively small, an issue that has

27

C E S

to be addressed and adjusted in the next MFF, so that the
Union can carry out its activities and tasks in line with the
Stockholm Programme12 and the Lisbon Treaty. A special
focus, according to the Parliament, should be on policies like
immigration, asylum and security.

Moreover, there have to be better synergies between the
different funds and the programmes, to be achieved by
applying a simplification of the management of funds and by
allowing cross-financing. In this context the EP welcomes
the Commission’s expressed intention to streamline current
instruments used for Home Affairs in a two-pillar structure
and, where the possibility is given, in a shared management.

4. Global Europe

The under-financing and the acute flexibility problems in the
implementation of the EU’s activities in the external policy
area are of deep concern to the EP. Therefore, it stresses
the need to address these problems by filling existing gaps
between ambitions and resources, and by allowing more
flexibility in the use of instruments.

12 The Stockholm Programme is the successor of the Hague and Tampere Programmes, and
sets out the EU’s priorities in the areas of justice, freedom and security for the period
2010–14, which are, for example, fundamental rights and freedoms, the development of an
area of justice accessible to all and at the same time favouring cooperation between judicial
authorities and the mutual recognition of court decisions within the EU, the protection of
citizens and the fight against organised crime and terrorism. The programme further aims to
meet upcoming challenges and, at the same time, to strengthen the areas of justice,
freedom and security. The actions of the Stockholm Programme especially focus on the
interests and needs of citizens. The Stockholm Programme, accessed at
http://europa.eu/legislation_summaries/human_rights/fundamental_rights_within_european_
union/jl0034_en.htm on 6 February 2012.

28

C E S

5. Administration

The EP supports a restructuring of the administration, but
only on the condition that the Commission presents a clear
analysis of administrative expenditure post-2013, by also
taking into account the public finances consolidation efforts,
the new tasks and competences that arose from the Lisbon
Treaty and, last but not least, an optimal use of human
resources in the European institutions.

Outside budget expenditure

Concerning the off-MFF expenditure, the European
Parliament has the following position: It calls for a
budgetisation of the European Development Fund; however,
this step should come along with an overall increase in the EU
budget by the amount initially allocated to finance the EDF.

Overall, off-MFF expenditure is not discussed at length in the
resolution.

Simplification/result orientation/conditionality

Throughout the European Parliament’s resolution a lot of
emphasis is put on the aspect of simplification. This can be
seen, for example, in the demand of the Parliament to generally
simplify the financing system of the next budget. Furthermore,
it focuses on different areas, such as cohesion policy, where
procedures and rules have to be simplified. It also mentions

29

C E S

the need for changes within the implementation mechanism
of the CAP, and within the management of funds for the areas
of security and citizenship.

When it comes to macro-economic conditionality, the European
Parliament warns against the use of this instrument, especially
concerning the cohesion funds, as this would oppose the very
objective of this policy, which is to reduce regional disparities.
The Parliament therefore calls for a better surveillance of the
use of cohesion funds.

All in all, one can read throughout the resolution that the
Parliament is favouring the improvement of synergies between
all funds of the budget and the development of more result-
oriented policies. This is what an efficient budget would mean
for the Parliament.

Summary

Through its resolution on the next MFF the European
Parliament intends, as already mentioned in the Introduction,
to set down its position and priorities for the upcoming
negotiations with the Council.

It first of all strongly favours the introduction of own
resources in accordance with the Lisbon Treaty. However,
it does not present a clear view of how this should look,
leaving possible avenues open.

30

C E S

As the EU is facing a lot of challenges in the short term and
also in the long term, but also because of the additional
financial needs arising from the changes brought by the
Lisbon Treaty, the EU budget cannot remain the same. The
European Parliament therefore opts for an increase in the
total level of funding to at least 1.11% of EU GNI.

The emphasis lies furthermore on the achievement of growth
and competitiveness within the EU, which is in line with the EU
2020 goals. This is why areas like research and development
should receive more attention, as well as more money.

Last but not least, the European Parliament calls for a more
efficient budget, which can only be achieved through a simplifica-
tion of the rules, mechanisms and instruments of the different
policy areas, and through an orientation more focused on results.

31

C E S

4. The Polish view

Paweł Tokarski and Patryk Toporowski

Introduction

It would not be an exaggeration to say that Poland’s position
on the next Multiannual Financial Framework is one of the
most supportive of the proposals put forward by the European
Commission, which represents the EU’s interest.13

Poland fully supports the further deepening of European
integration, taking part, as a non-eurozone member, in the
Euro Plus Pact and the new ‘fiscal compact’ treaty. For
Poland, Europeanisation of policy fields implies increased
expenditure, and the development of new economic policy
areas requires an adequate level of financing. For this
reason, Poland recognises that the European integration
process inevitably leads to an increase of the EU budget.

Poland also understands that EU institutions need financial
autonomy and proper financial instruments in order to
secure their independence from the Member States.

The ambitious goals of European integration require proper
EU spending. However, Poland is also aware that the common
13 See the Polish Presidency approach presented at the Informal Meeting of Ministers and
State Secretaries for European Affairs 28–29 July 2011, Sopot, Dziś w Sopocie początek
rozmów o przyszłym budżecie Unii Europejskiej, 28 July 2011, accessed at
http://www.euractiv.pl/prezydencja/artykul/dzi-w-sopocie-pocztek-rozmow-o-przyszym-
budecie-unii-europejskiej-002844 on 12 December 2011.

32

C E S

budget size and shape should be the outcome of ambitions, as
well as limitations. Moreover, European Added Value (EAV), as
well as growth orientation, is a crucial issue for Poland, which
sees the EAV reflected in the EU 2020 strategy, a reference
point for the next MFF proposed by the Commission.

Poland values highly the Commission’s and Parliament’s
willingness to abandon the national interests and juste retour
logic seen in previous MFF negotiations.

With the European Union experiencing one of the gravest
economic crises in its history, Poland believes that the EU
budget can be used to exit the downturn, thanks to a higher
efficiency of EU-level spending as compared to national
spending in certain areas. If the EU does not fund some
actions, these will be ultimately funded with national or local
money, most probably at greater cost. What is more, Poland
sees the EU budget, because of its investment nature, as
free from the austerity paradox (in which cuts in most pro-
growth expenditure result from a necessity for quick budget
reduction), and it should thus be more effective. Hence the
arguments in support of minimising the EU budget in order
to spend money more efficiently and effectively on a national
level are inaccurate.

The significance of EU spending should not be overestimated,
due to its small size; however, it induces investments and this
is why it is important for growth.

33

C E S

Among the ideas hidden behind the EU budget, there should
also be a level playing field for all regions.14 Therefore, all
policies and thus all funds for internal use ought to be accessible
to all Member States and regions, not only to particular ones.

Additionally, in talking about the increasing role of the EU
in the world, one should remember that the budget is also a
suitable tool to take care of and improve relations with EU
neighbours and partners.

Long before the announcement of the Commission’s proposal,
Poland expressed the need to create a budget that is simple,
transparent and ‘readable’15 to citizens. This is important when
the EU budget is seen to reflect the European integration
process. The more obscure and complex the solutions on a
budget, the more questions should be asked about the well-
being of the integration. Is the process going forward or rather
backward? Deepening the integration should be reflected via a
more transparent and simple budget.

Assessment of the European Commission’s proposal
from the Polish perspective

Below an assessment is given of the main elements of the
EC proposal from the Polish perspective, elaborated on the

14 See the Polish Presidency approach presented at the Informal Meeting of Ministers and
State Secretaries for European Affairs 28–29 July 2011, Sopot, Dziś w Sopocie początek
rozmów o przyszłym budżecie Unii Europejskiej, 28 July 2011, accessed at
http://www.euractiv.pl/prezydencja/artykul/dzi-w-sopocie-pocztek-rozmow-o-przyszym-
budecie-unii-europejskiej-002844 on 12 December 2011.
15 Ibid.

34

C E S

basis of interviews and available documents.


To understand Poland’s position towards the size of the next
MFF, one has to bear in mind that its position is influenced
by the sovereign debt crisis in several Member States of the
euro area, as well as the financial, economic and banking
crises. Before these crises, Poland was calling for a higher
budget for the European Union and its policies. As a result
of the crises, Poland now defends, in financial terms,
a status quo budget for the next MFF. This means that
Poland does not want to see a decrease in the size of the
Multiannual Financial Framework.

However, the devil is in the details. Particularly, the status
quo could mean 1.12% of the GNI of the EU-27, or—as in
the Commission proposal—it could mean a multiplication
by seven of the last year of a current financial perspective
(2013) with adjustment for inflation, or it could even mean
no decrease in the total amount (which is €975.78 billion in
current prices).16

As a response to the EU budget review communication,17
Poland opts for a seven-year period. This is because it is

16 European Commission, Financial Framework 2007–2013, accessed at
http://ec.europa.eu/budget/figures/fin_fwk0713/fwk0713_en.cfm on 12 December 2011.
17 European Commission, The EU Budget Review, Communication from the Commission to
the European Parliament, the Council, the European Economic and Social Committee, the
Committee of the Regions and the National Parliaments, COM(2010) 700 final, Strasbourg,
19 October 2010, 6, accessed at
http://ec.europa.eu/commission_2010-2014/president/pdf/eu_budget_review_en.pdf
on 12 December 2011.

35

C E S

believed to be helping a proper implementation of EU policies.
Particularly when discussing long-term projects of cohesion policy,
supporting goals of the EU 2020 Strategy and others, the shorter
period may not be sufficient. Thus, the seven-year period is the
right balance between the duration and stability needed for
programming.

Overall, Poland will maintain its position that the next
MFF should amount to 1.13% of the GNI and cover a seven-
year period, mainly because Poland would, without the
crises, support a higher EU budget, and because Poland is
convinced that EU-level funds are more efficient and have a
long-term investment character.

Financing the MFF: corrections, rebate and own resources

Traditionally, the Polish position towards any corrections
or rebates is also based on transparency, simplicity and
fairness, rather than on financial terms only.

A simpler and clearer system of revenues would contribute
to better spending of EU funds, which should not be
neglected by those countries that stress maximising results
gained from limited European money.

Looking into the collection costs of customs on the external
EU borders, which is called a hidden rebate, dedicated also
to the Netherlands, Poland makes the following analysis. Today
all the Member States collecting customs in the name of the EU

36

C E S

can keep 25% of the collected amount as the collection costs
refund. The Commission proposed a reduction of that share
from 25% to 10%. Poland supports the Commission’s proposal,
although it has external borders with Russia, Ukraine and
Belarus. Poland supports the proposal because the level of 10%
corresponds better with the real collection costs across the EU.

In the eyes of Poland, the entire system of rebates is
unclear, complex and unfair not only to Poland but also to
other poorer Member States who finance those corrections.

The annual cost of the British rebate, which varies from €3.5
billion to €6 billion,18 is borne directly by less developed EU
Member States. The British rebate was established in 1984,
when the UK’s GNI was around 80% of the EU average.
Now, when UK GNI is above 100% of the EU average, it is
not justifiable to ask Member States with a GNI amounting
to 60% of the EU average to pay for this rebate.

For instance, in 2009 the additional cost of the British rebate
for the Polish national budget was over €100 million. This
represented around 10% of the Polish national budget deficit
in 2010.

When discussing budget revenues, it is significant that the EU
is not fulfilling its Treaty obligations in this respect. Article 311
of the TFEU indicates that the European Union is financed

18 In 2010 the British rebate amounted to €3.5 billion; in 2009 it was €5.6 billion, EU Budget
2010 Financial Report, accessed at
http://ec.europa.eu/budget/library/biblio/publications/2010/fin_report/fin_report_10_data_en.pdf

37

C E S

by own (meaning independent and direct) resources.19
Unfortunately, today less than 14%20 of the annual budget is
financed by traditional own resources, which are custom duties
and sugar levies. The rest (over 86%) is a simple bank transfer
from national budgets. This situation causes a headache to
many ministers of finance among Member States. Therefore,
Poland’s position is that the majority of the EU budget should
be financed by genuine own resources. The GNI-based
national transfers, however, ought to be maintained for
balancing the income and outcome sides of the budget. In this
context, Poland supports the FTT as the EU budget revenue
and is open to discussing the VAT-based resource.


1A. Smart growth

Poland supports investment in innovation and education,
acknowledging its importance for increasing economic
growth. Yet, as with the other new Member States, Poland
does not profit considerably from the former 1A heading,
despite its very low level of general financing of the research
and development sector. The data show that Poland is a
relatively modest beneficiary compared to the other EU-15
countries, receiving less than 2% of funds.21 This is due to a

19 European Union, Treaty on the Functioning of the European Union, accessed at
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:EN:PDF, 181,
20 Compare traditional own resources, accessed at

http://ec.europa.eu/budget/library/figures/B2011_recap_by_MS_en.pdf, data for the year
2010, on 12 December 2011.
21 European Commission, EU Budget 2010 Financial Report.

38

C E S

moderate participation in the Seventh Framework Programme,
which accounts for about 70% of expenditure under the former
competitiveness heading.

Therefore, Poland maintains that the next framework programme
should be sufficiently adjusted to real needs. It should be
focused not only on delivering excellence of research but also
on eliminating the differences between the Member States in
the field of research and development.

The small and medium-sized enterprises sector occupies quite
an important place in the Polish economy, accounting for around
46% of the GDP.22 Therefore, the government welcomes the
further competitiveness orientation towards the SME sector.
In this regard, Poland claims that increased use of repayable
financial instruments will increase the effectiveness of the sector.
These resources should be allocated to low-risk projects, unlike
non-repayable grants, which should be allocated to high-risk
projects. Poland also underlines the necessity of a proper
information campaign directed to the SME sector to diminish the
possible concerns of entrepreneurs about the repayable funds.23

There exist some doubts as to the merger of Lifelong Learning
and Youth in Action into one programme, because of their
different operating philosophies. This action should be discussed
further. It is also worth considering the inclusion of Eastern

22 Polska Agencja Rozwoju Przedsiębiorczości, Raport o stanie sektora małych i średnich
przedsiębiorstw w Polsce (2010), accessed at
http://www.parp.gov.pl/files/74/81/380/9282.pdf on 12 December 2011.
23 Poland, Ministry of Foreign Affairs, Stanowisko RP w sprawie: Pakiet Wieloletnich Ram

Finansowych UE na lata 2014–2020, (Warsaw, 11 January 2012).

39

C E S

Partnership states to the ERASMUS programme and also adding
a new action line dedicated to PhD students.


From the Polish perspective, cohesion policy is the most
important component of the EU budget. For Poland the use
of the cohesion policy instrument can make the EU budget a
very efficient long-term investment tool.

There is also a widespread belief in Warsaw that cohesion
policy is the ideal tool for achieving the Europe 2020 objectives.
Therefore, the official position states with satisfaction that this
policy was identified as one of the pillars of the Europe 2020
strategy.24 It is also assumed that cohesion policy should be
regarded as a general development policy, with a proven and
well-established system of operations and a multisectoral
approach to development issues, connecting social and
territorial dimensions.25 The Polish government argues that the
previous experience proves that cohesion policy allows for
better coordination at the EU and national levels, making
actions more efficient and cost effective.

24 Cohesion Policy as an Efficient, Effective and Territorially Differentiated Response to EU
Development Challenges, Position of the Government of the Republic of Poland on the
Future of European Union Cohesion Policy after 2013, Adopted by the European Committee
of the Council of Ministers on 18 August 2010, accessed at
http://www.mrr.gov.pl/rozwoj_regionalny/Polityka_spojnosci/Polityka_spojnosci_po_2013/
Debata/Documents/updated_official_position_of_pl_cp_after_2013.pdf on 14 December 2011.
25 Ibid

40

C E S

In addition to achieving the EU 2020 objectives, cohesion
policy could also play a role in overcoming the sovereign
debt crisis. Poland supports the idea that, in times of crisis,
a bigger share of spending should be funded with the EU
budget. The EU budget could be more oriented towards
enhancing the sources of growth, particularly through better
and more long-term investments financed via cohesion
policy. Unfortunately, however, the capping level proposed
by the European Commission, 2.5% of GNI, is too low.

The positive economic effects of the EU’s cohesion policy
are often quoted in the Polish arguments. For example,
the report of the Polish Ministry of Regional Development
concludes that in 2009, when Poland was the only country
in the whole EU to maintain positive economic growth, half
of its GDP growth was produced as a result of the cohesion
funding.26 This is also supported by reports prepared for
the European Parliament which concluded that an injection
of 1% of GDP as cohesion expenditure generates at least
2% of GDP of return in the long run to net recipients.27
Nevertheless, the benefits are not only limited to the net
beneficiary countries. The EP experts showed that net
contributors also benefit from this policy in an indirect way,

26 Poland, Ministry of Regional Development, Wpływ funduszy europejskich na gospodarkę
polskich regionów I konwergencję z krajami UE, Report 2010 (Warsaw, 2010), 5, accessed at
http://www.mrr.gov.pl/rozwoj_regionalny/Ewaluacja_i_analizy/Raporty_o_rozwoju/Raporty_
krajowe/Strony/Wplyw_FE_na_gospodarke_polskich_regionow_i_konwergencje_z_krajami_
UE_Raport_2010.aspx on 14 December 2011 .
27 European Parliament, Directorate General for Internal Policies, Policy Department B:

Structural and Cohesion Policies, Regional Development, The Economic Return of Cohesion
Expenditure for Member States (May 2009), 8, accessed at
http://www.europarl.europa.eu/meetdocs/2009_2014/documents/regi/dv/pe419106_ex_/
pe419106_ex_en.pdf on 14 December 2011.

41

C E S

mainly via the trade channel; however, the positive impact
varies across the Member States.28 These conclusions are
strengthened by the European Commission data contained
in the budget review, stating that cohesion policy contributes
to real economic growth in the EU.29 These studies make the
Polish argumentation stronger and more reasonable.

Additionally, when analysing the Polish support for cohesion
policy, one cannot ignore its media effects. Information
about the infrastructure investments is visible in Poland
virtually at every corner—new roads, bridges, buildings and
so forth are accompanied by information on the financing
of the EU. This builds a very positive image of the European
Union with the Poles, among whom support for the EU ranks
at a fairly high level. But the image is not the only outcome.
Thanks to the investments, many jobs have been created,
access to new areas has been improved and many costs
have been reduced (including travel time).

The importance of the cohesion policy in the priorities of
the Polish foreign policy was also evident during the visit to
Brussels in September 2010 of then newly elected President
Bronislaw Komorowski. President Komorowski stressed
the need to maintain the current level of cohesion policy
financing.30

28 Ibid. 10–11.
29 European Commission, The EU Budget Review.
30 A. Rettman, ‘Polish President Airs Concerns on EU Budget’, Euobserver.com, 1 September
2011, accessed at
http://euobserver.com/18/30711 on 14 December 2011.

42

C E S

However, at the moment, there are still many uncertainties that
need to be resolved in the course of the MFF negotiations.
The question of the size of the EU budget is closely linked
to cohesion policy. This is because Poland, as well as other
net beneficiaries, fears that the rigid French position on the
CAP, linked with the British on the rebate, would risk major
cuts in the EU budget being made at the expense of cohesion
policy.31 A foretaste of such a threat was evident in October
and December 2010. On the occasion of the European Council
meetings, special letters were published opting for a net
reduction of the overall size of the multiannual budget. In this
case, Poland shared the concern of the European Commission
as to the possible conclusion of an informal agreement between
the biggest net contributors: France, Great Britain and Germany.

With regard to the implementation rules of the cohesion policy,
one of the most important issues for Poland is rule ‘n + x’. This
rule sets the number of years in which Member States could
spend money, starting from a particular year. For instance,
under rule n + 3 for year 2007, Poland could have run projects
in the years 2007, 2008, 2009 and 2010, whilst still using funds
allocated for year 2007. This rule is necessary, especially in
running big infrastructural projects. However, currently, the
number after the ‘plus’ sign is under discussion. The European
Commission asks in its proposal that all Member States follow
the rule ‘n + 2’. Poland’s position will most likely be to demand
to use the ‘n + 3’ rule in the first years of the new perspective.

31 ‘Secret Bid to Freeze EU Budget’, Financial Times, 17 December 2010.

43

C E S

Regarding the territorial scope, Poland claims that cohesion
policy should cover all regions of the EU and be addressed to
the entire EU and not to a specific group of countries. It also
means that Poland believes the cohesion policy can still be an
effective tool in the EU-15. In these countries the policy could
support different goals, such as acquiring new skills, promoting
innovations or levelling regional differences. Poland hopes
that enlarging the geographical range of the cohesion policy
through the concept of transitional regions will weaken the
demand of financing the cohesion instruments through national
budgets. Such a view was previously put forward during
negotiations of the current financial perspective for 2007–13.

As far as the distribution method is concerned, the Polish
government supports the so-called Berlin method,32 which is
currently applied, stating that only this means of allocation
could provide a sufficient level of investment where it is
needed.33

Another question is the thematic concentration of the cohesion
policy. A careful reading of the proposed solutions shows that
the European Commission concentrates almost exclusively
on so-called ring-fencing.34 This cannot be supported by

32 Established in 1999 during the preparation of Agenda 2000, it calculates aid using a broad
array of factors, including population of the eligible regions, regional prosperity, national
prosperity and unemployment of the eligible regions, thus privileging less developed regions
and countries.
33 Poland, The Government of the Republic of Poland Official Position on the Commission

Communication ‘Conclusions of the Fifth Report on Economic, Social and Territorial Cohesion’,
Approved by the Committee for European Affairs of the Council of Ministers on 25th January
2011, 10, accessed at
http://ec.europa.eu/regional_policy/archive/consultation/5cr/pdf/answers/national/poland_
national_government_2011_02_01.pdf on 14 December 2011.
34 Securing funds for specific projects, such as the European Social Fund. This money cannot

be spent on anything else.

44

C E S

the Polish government. Poland cannot agree to a top-down
approach for all Member States to allocate fixed amounts
(or percentages) of the national envelopes for the European
Social Fund (ESF). That solution does not take into account
national differences or needs and seems to be rather a
guarantee of desired global allocation of the ESF than a real
need of all 27 Member States. In this case, Poland probably
will argue for the ESF’s ring-fenced ‘allocation’.


Poland underlines that the Common Agricultural Policy and
cohesion policy should complement each other, rather than
compete. In that context, the CAP should recognise the
differences in the economic development of agriculture in the
EU-15 and EU-12. The new Member States should strive for the
modernisation and concentration of farms, while in countries
where agriculture is more developed, there is a need to focus on
other challenges, such as environmental protection.

The CAP should also develop in the direction of renewable
energy sources, promoting innovation and climate-friendly
technologies. The system of direct payments must seek to
align conditions of competition between Member States,
rather than maintaining the current agricultural structure in the
EU. However, no additional administrative burden should be
imposed in introducing these conditions. The CAP must remain
a policy implemented at the EU level. The renationalisation

45

C E S

would lead to the end of the single market for agricultural
products.

Poland claims the current spending ratio of the first pillar
(direct payments) and second pillar (development of rural
areas) of the CAP is not correct, because the further reforms
of this policy should lead to enhanced focus on development
in rural areas.35 Besides, the Polish government positively
notes the tendency to reduce differences in direct payments
for farms, but the progress is unsatisfactory and largely
dependent on the intensity of agricultural production, based
on historical data.

Poland supports the idea of reducing support for the largest
farms, creating effective action mechanisms in crisis situations
and covering the second pillar under the Common Strategic
Framework. This last point is important to ensure optimal
multipath sustainable rural development, which requires a
common use of the instruments of the CAP and cohesion
policy. The allocation of additional funds for research and
innovation in the field of food security and the bioeconomy in
the Strategic Framework for Research and Innovation may also
be backed up by the Polish government.36

35 Poland, Ministry of Agriculture and Rural Development, The Future of the EU Common
Agricultural Policy beyond 2013. (Warsaw, May 2009), 5–6, accessed at
http://www.minrol.gov.pl/eng/content/view/full/4009 on 15 December 2011.
36 Poland, Ministry of Foreign Affairs, Stanowisko RP w sprawie.

46

C E S


In this area Poland welcomes the reform of funds concerning
migration management and internal security, especially because
of its simplification and increased flexibility. Nevertheless,
the Polish government is waiting for more detailed proposals
concerning the management, implementation and means of
allocation of Home Affairs funds.

4. Global Europe

Another argument for increasing the overall size of the MFF is
that, with the entry into force of the Treaty of Lisbon, the EU
has been given new tasks for which it must be provided with
an appropriate level of funding.

Poland actively supports the development of the former second
pillar, and calls for the allocation of adequate resources for the
functioning of the External Action Service, in order to increase its
effectiveness. Another area located in the orbit of Polish interest
is the Neighbourhood Policy, especially its eastern dimension.

Poland raised some objections concerning the creation of a pan-
African financial facility, asserting that the EU should engage
itself also in other geographical areas, such as Central Asia.
Creating such a facility will be at the cost of financing actions
in other important extra-EU areas.

47

C E S

The European Endowment for Democracy, which could play
a role as a long-term supplement to the existing EU external
actions, is strongly supported by Poland.


Generally, Poland supports the Commission’s proposal 37 to put
large-scale programmes, such as ITER and GMES, outside the
MFF. The Commission’s argumentation that the costs are too
high and unpredictable (e.g. they may unexpectedly expand) to be
covered by such a small common budget is shared by Poland.

Also, the need to keep the European Development Fund outside
the budget seems to be a normal consequence of the specific
origin of this facility, and that is why the final outcome should
be close to the current status quo in this respect (including the
contribution key). On the other hand, Poland claims that the
funds covering social policy should be better coordinated. For
this purpose the European Globalisation Adjustment Fund, when
concerning support for industry workers, should be incorporated
into the European Social Fund.38


Poland supports simplification in general, and in particular, for
the cohesion policy. Nevertheless, the simplifications proposed
by the Commission are cosmetic ones. In Poland’s view,

37 European Commission, A Budget for Europe 2020.
38 Poland, Ministry of Foreign Affairs, Stanowisko RP w sprawie.

48

C E S

regrouping and renaming policies has nothing to do with real
and deep simplification, which might be expected.

What is more, some solutions addressed in the EC’s proposal
are heading against the simplification process. One of the
reasons Poland will not support a decrease in the cohesion
funds to enhance the proposed Connecting Europe Facility
is that this would establish a new central management
with a new, additional and parallel implementation system.
Establishing the Connecting Europe Facility partially by using
the national allocations of the Cohesion Fund would not only
deprive Member States’ of part of their funds, but will as
well oblige the Commission to hire new desk officers, and
Member States to establish new and costly implementation
and monitoring systems. To sum up, Poland is expected to
support real simplification, which in fact is not addressed by
the Commission.

Concerning the conditionality issue, the Polish government
underlines that the possible use of the Structural and Cohesion
Funds to strengthen the Stability and Growth Pact will create
a ‘disproportionate burden’ for the new Member States.
Therefore, the new conditionality mechanism should not
generate new administrative burdens, and it should be applied
equally to all Member States.

Poland has similar doubts about macro-conditionality, despite
the fact that it would probably have no problems in fulfilling
these conditions.

49

C E S

Linking EU financing with the transposition of EU directives
is not a fair way to accelerate integration, as local authorities
cannot be held responsible for actions that are not in their
domain of competences. Nevertheless, the conditionality
mechanism relying on positive incentives that were included in
the Commission Communication of 29 June39 was welcomed.
Poland accepts the ‘ex ante’ conditionality, but demands that
the ultimate decisions should be taken at the Council level.

Poland will support the new proposed measures such as the
performance framework and performance reserve, the new
dimension of ex ante conditionality and ex post conditionality.
Yet, there will be one reservation on ‘no consent for any
corrections or reduction of pre-allocated national envelopes’.
However, this position stems from implementation and
reprogramming difficulties, rather than from reluctance to
cancel funds.

In general, there is clear consent on mainstreaming of the
EU budget with horizontal issues (such as climate change,
environment, consumer protection, etc.), provided it would
not stiffen too much the EU expenditures. Moreover, climate-
proofing cannot lead to burdening Member States with
additional requirements in relation to the existing ones.

39 EC MFF proposal, accessed at
http://ec.europa.eu/budget/biblio/documents/fin_fwk1420/fin_fwk1420_en.cfm
50

C E S

Summary

To sum up, the Polish view of the next MFF is similar to that
of the European Parliament and the European Commission,
mainly because Poland supports the European integration
process and recognises that an ambitious European Union
needs a proper level of resources, while at the same time
ensuring real European Added Value and seeking long-term
growth investments.
The bigger the EU budget, the more actions that are more
effective at an EU level can be carried out. Thus, Poland is
against spending cuts. The budget size must be no less than
1.13% of EU GNI or a multiplication of the last year of current
perspective (2013) adjusted for inflation, and it should be
designed for a seven-year period.

An ambitious cohesion policy, as a universal investment
instrument of the EU, is needed, especially in times of crisis
and to decrease the welfare differences between Member
States, which lie at the root of the crisis in the euro area. In
this context, the proposed capping at 2.5% of GNI is seen
as too low. Poland opts for strengthening the second CAP
pillar, restructuring of rural areas. The system of payments
should be decoupled from historical production volumes. The
greening of CAP should be mainly introduced by programmes
from the second pillar.

New EU powers added by the Treaty of Lisbon, especially
in the area of foreign policy, cannot be effectively

51

C E S

implemented without an adequate level of funding, in
particular, the European External Action Service and the
Eastern Partnership.

In the history of European integration, the general tendency
was to facilitate the difficult decision-making process
between the EP and the Council. Therefore, Poland claims
that one should separate the discussion of the budget from
the pernicious logic of juste retour, which makes it difficult
to talk about the budget and brings the discussion about
the European Union to the particular interest-driven logic
of balance of payments. Therefore, the EU needs to have
its genuine own resources, which is also required by article
311 of the Treaty. Moreover, Poland sees that it will only be fair
when no Member States receive a rebate.

52

C E S

5. The Dutch view

Nico Groenendijk

Introduction

In the mid-1990s the Netherlands joined the ranks of those
Member States that increasingly felt discontent with their
position as net contributors to the EU budget. In 1998 the
Dutch Minister of Finance of that time, Gerrit Zalm, proposed
the introduction of a so-called net limiter, intended to limit
the extent to which Member States would be net contributors
to the EU budget. Although such a net limiter has not been
realised, in 2005 the Dutch government was able to negotiate,
for the period 2007–13, a gross reduction of its annual GNI
contribution of €605 million, in addition to continuation of its
reduced contribution to the financing of the UK abatement.
Although this outcome was looked upon favourably by the
vast majority of political parties, the Dutch contribution to
the EU budget has remained a much-discussed topic in Dutch
national politics. It is fair to say that the commonly held view in
The Hague is that the Netherlands should pay less to the EU
budget and that the EU budget as such should be reduced
rather than expanded.40 To a large extent this ‘Dutch view’
is also representative of a larger group of Member States,
as was shown in September 2011 when the Ministers of

40 A brief analysis of election manifestos for the 2010 general elections shows that this is the
view held by all parties, with the exception of the social-liberal party (D66) and the left-
wing green party (Groen Links).
53

C E S

Finance of Austria, Denmark, Finland, France, Germany, Italy,
the Netherlands, Sweden and the United Kingdom issued a
position paper in which they argued for a scaling-down of the
EC’s MFF proposal.41 This position paper built on an earlier
statement made (in December 2010) by Finland, France,
Germany, the Netherlands and the United Kingdom, in which
they proposed a freeze—in real terms—of the EU budget for
2014–20.

The official Dutch central government position can be found
in various documents. In April 2008 the previous government
(led by Prime Minister Jan-Peter Balkenende), made up of
Christian Democrats (from CDA and CU) and Socialists
(PvdA), issued a response to the European Commission’s
consultation paper on the budget review.42 In the same month
it provided a response to an advisory report on the EU budget
issued by the Dutch Advisory Council on International
Affairs.43 After the general elections in 2010, a new government
came into power, consisting of Christian Democrats (CDA)
and Liberals (VVD), led by Prime Minister Mark Rutte. This
government is a minority government that is supported by
the right-wing party of Geert Wilders (PVV). The VVD-CDA
coalition agreement of September 2010 contained some
general statements on the competences and tasks of the
EU, on the EU budget and on a reduction (of €1 billion annually)

41 ‘EU Budget Skirmishes Begin as Eight Countries Attack Brussels’ Proposals’, EU Observer,
13 September 2011.
42 The Netherlands. Ministry of Foreign Affairs, Dutch Priorities for a Modern EU Budget.

Response of the Netherlands to the Issues Paper (2008).
43 The Netherlands, Ministry of Foreign Affairs, letter to Parliament dated 11 April 2008 (DIE

529/08), in response to the Advisory Council on International Affairs (AIV), De financiën van
de Europese Unie, 2007.
54

C E S

of the Dutch contribution to the EU.44 In 2011 the central
government’s position was outlined in more detail in two
official position papers.45 In these documents the following
basic principles for the MFF 2014–2020 are put forward:
• The EU budget should be an austerity budget, and for
2014–20 it should be frozen in real terms.
• The EU budget should be prioritised according to the
objectives of Europe 2020. New priorities should be met
in financial terms by spending less on old priorities.
• The EU budget should be financed in a transparent and
fair way, that is, completely financed by contributions
based on Member States’ GNI.
• EU spending can only be justified if intervention on
the EU level adds value and is in accordance with the
subsidiarity principle.

Generally, the Dutch central government has shown appreciation
for the EC proposal, but it has also indicated that it still has crucial
objections.

It is important to point out that not only the Dutch central
government has taken a position on the MFF 2014–2020,
but also the regional and local authorities (represented
by the Interprovinciaal Overleg, IPO, and the Vereniging
Nederlandse Gemeenten, VNG) have issued position papers
on the budget review and the EC’s proposal. Although these
authorities do not take positions on the size and financing of

44 Vrijheid en verantwoordelijkheid. Regeerakkoord VVD-CDA (September 2010), accessed at
http://www.europarl.europa.eu/news/en/headlines/content/20110429FCS18370/html/The-
battle-for-the-EU%27s-long-term-budget on 19 December 2011.
45 Parliamentary Paper 21 501-20, no. 529, (28 March 2011) and Parliamentary Paper 21

501-20, no. 553 (2 September 2011).
55

C E S

the EU budget, they have put forward views on specific parts
of the proposed MFF, notably on cohesion policy and the CAP.

proposal from the Dutch perspective

Below, an assessment is given of the main elements of the
EC proposal from the Dutch perspective.46


Over the last years the Dutch central government has shifted
its position on the level of expenditure in the next MFF.
Initially (in 2008) it held the position that total EU spending
should remain constant as a percentage of EU GNI. Later
it argued in favour of a freeze of the absolute level of
expenditure, in real terms, but recent developments show
that this position has now changed towards a freeze in
nominal terms. The Dutch central government stresses that
the cutbacks Member States make in their own budgets
should also be reflected in the EU budget. During a meeting
with the Parliament, the Secretary of State for European
Affairs recently referred to the common action of a number
of Member States, including the Netherlands, that declared
themselves in favour of a nominal freeze.47 Moreover, this
position is supported by a majority in the Dutch Parliament.48

46 This assessment is based on the two most relevant Parliamentary Papers (21 501-20 no. 529
and no. 553), to which all statements in the text refer, unless indicated otherwise.
47 Parliamentary Paper 32 833, no. 6.
48 The Plasterk/Voordewind Resolution, Parliamentary paper 32 502, no. 19 (31 May 2011),

urges the government not to accept an MFF that increases nominal expenditure.
56

C E S

The Dutch central government welcomes the shift of expenditure
within the EU budget towards policy areas such as competiveness,
innovation and cooperation in the field of justice (especially
migration policies). It emphasises that expenditure on cohesion
policy and administrative expenditure should be further reduced
to make this shift possible.

The Dutch central government is reluctant when it comes to
the possibility of shortening the MFF period from seven to five
years (or 10 years with a major mid-term review). Although this
would increase flexibility, it would also decrease the predictability
of expenditure.

Dutch regional and local authorities do not have a position on
the level of the MFF, as—according to them—this is primarily
an issue between the EU and national governments. In their
view, in some cases, new priorities require new budget lines;
in other cases, it is merely a question of shifts within existing
budget lines.

The Dutch regional and local authorities question the general
seven-year planning period for European programmes, which
is linked to the MFF period. They argue in favour of 10-year
programmes with major mid-term evaluation.49

Financing the MFF: corrections, rebate and own resources

Rather than to the level of expenditure as such, the main
concern of the Netherlands relates to its net contribution

49 VNG/IPO, The European Union beyond 2013. Working Together on a Stronger and More
Sustainable Europe (April 2008).
57

C E S

to the EU. During the 2001–6 period, the Netherlands was
one of the main net contributors to the EU budget. The
current position (under the MFF 2007–2013) has improved
due to the reduction the Netherlands (and Sweden) receive
(in addition to the UK rebate), which in the case of the
Netherlands amounts to €605 million annually. Still, even
after this reduction the Netherlands pays €5,614 million to
the EU budget and receives €2,120 million, resulting in a net
contribution of €3,494 million.50

The Dutch government wants its contribution to the EU
budget to be decreased substantially for 2014–20, and
as such, it welcomes the correction mechanism that the
EC proposes. However, the coalition agreement aims at
a net annual reduction of €1 billion and the gross annual
reduction of €1,050 million that the EC has proposed for
the Netherlands will be considerably less in net terms
(approximately €750 million), the main reason being that the
reductions that are envisaged for 2014–20 (for Germany,
the Netherlands, Sweden and the United Kingdom) will be
paid for by all Member States, including those Member
States that get such a reduction. Moreover, the decrease
of retention costs (from 25% to 10% of revenues to be
transferred) for the levying of traditional own resources will
worsen the Dutch net position by €250 million annually.

50 These are figures for payments in 2010, based on the 2010 annual report of the European
Court of Auditors. There are different ways to calculate net positions (simple net position, net
position excluding administrative expenditure, net position excluding traditional own resources).
Furthermore, these net positions can be presented in absolute terms, as a percentage of GDP
and per capita. In absolute terms Germany is currently the largest net contributor to the EU
budget. Related to GDP and per capita, Denmark is the largest net contributor. See Deutsche
Bank Research, EU Net Contributor or Net Recipient: Just a Matter of Your Standpoint?
(May 2011).
58

C E S

The Netherlands is in favour of a funding system that is fully
based on GNI contributions. It is against the introduction
of new own resources and/or EU taxes, as this would only
complicate the funding system and make it less transparent.
More fundamentally, the Dutch position is that the power
to tax is a matter of national sovereignty and should not be
transferred to the EU level. A financial transaction tax should
only be introduced on a global level and should not have as
its primary aim the funding of a budget.

The Dutch regional and local authorities argue in favour of
sufficient resources for the EU budget, without taking a position
on the overall level of these resources. They advocate a
transparent funding system, in which rebates and corrections
for individual Member States should be avoided.51


1A. Smart growth

Generally, the increased focus (in budgetary terms) on
competitiveness and infrastructure is supported by the
Netherlands. As far as competitiveness is concerned, the
Dutch government welcomes the increased focus in this
policy by means of the new strategic framework, Horizon
2020. The key themes that the EC mentions in this policy
area largely coincide with Dutch priorities. Relating to
infrastructure, the Netherlands supports the EC’s ideas for
Connecting Europe, but argues in favour of more clarity on

51 VNG/IPO, The European Union beyond 2013.
59

C E S

the use of innovative financing tools (like EU project bonds),
on how Connecting Europe relates to state-aid legislation
and on how to fit Connecting Europe into the existing budget.


Support from the EU’s cohesion policy should, according
to the Dutch central government, be limited to the poorest
regions in the poorest Member States (convergence regions).
Therefore, it does not support the introduction of a new
category of regions (transition regions). Total expenditure on
cohesion policy should be further decreased. In principle,
cohesion policy funding per Member State should be capped.
This position of course implies that the Netherlands itself
will not benefit anymore from cohesion policy funding,
which, as such, will have a negative impact on the Dutch net
position. However, limiting cohesion policy to convergence
regions only will substantially reduce the overall contribution
the Netherlands has to make to the EU budget. Such a
reduction will probably be in excess of the €235 million of
cohesion policy funding the Netherlands currently receives.
Again, the main yardstick from the Dutch perspective is the
impact of changes on its net position, with a €1˜billion decrease
in net transfers as the preferred outcome.

This position is not shared by the regional and local authorities
in the Netherlands. They are in favour of a cohesion policy that
involves all regions in the EU, as this is in their view essential

60

C E S

for reaching the Europe 2020 objectives, not only across the
EU but also in the Netherlands itself.52 Support from the EU
structural funds oils the wheels of regional and local policies
and acts as a catalyst/flywheel for reform.

Generally, the proposal to bring cohesion policy more in line
with the Europe 2020 strategy is fully endorsed, but IPO/
VNG argue in favour of some leeway for national, regional
and local authorities to fine-tune the Europe 2020 objectives
to the Member State’s context. Recently, during a hearing
organised by Dutch Member of the European Parliament
(and cohesion policy rapporteur) Lambert van Nistelrooij,
other stakeholders (companies and educational and R&D
institutions) expressed their support for this view.53


From the Dutch perspective, increased conditionality for
direct payments within the CAP is a positive development.
The Netherlands welcomes the EC proposal for ‘greening’
the direct payments, but is in favour of a more general
move towards conditionality and targeted support, rather
than generic support in line with the Europe 2020 strategy.
The Dutch government endorses the adjustment towards

52 Letter of the Interprovinciaal Overleg (IPO) to the Parliamentary Committee on European
Affairs (19 September 2011); Letter of the Vereniging Nederlandse Gemeenten (VNG)
to the Parliamentary Committee on European Affairs (26 September 2011). See also VNG/
IPO, The European Union beyond 2013; VNG/IPO, Van Europees cohesiebeleid naar een
duurzaam Europees gebiedsgericht ontwikkelingsbeleid (January 2010); VNG/IPO, Reactie
van de Nederlandse provincies en gemeenten op de conclusies bij het vijfde cohesieverslag
(January 2011).
53 Hearing ‘Hoe smart is Nederland?’, Provinciehuis Zuid-Holland, 13 January 2012.

61

C E S

more equal distribution of direct payments and emphasises
the importance of such adjustment being paid for by all
Member States with direct payments above the EU average.
As with cohesion policy, Dutch support for the adjustment
will depend on the impact on the Dutch net position.
Generally, the level of expenditure within this heading and its
development in terms of a nominal decrease is acceptable
to the Dutch central government.

The Dutch regional authorities generally find the EC proposal
on the MFF 2014–2020 and the CAP acceptable. They do,
however, argue that decreases in direct support for the
Netherlands (estimated to be 8%) should be compensated
for in the second CAP pillar. In addition, and in accordance
with the position of the Dutch central government, they
propose a wider use of conditionality and targeted direct
support (going beyond greening).54


The Dutch government endorses the increased emphasis on
cooperation in migration/asylum policies, as well as external
border control, as long as European Added Value can be
established, in terms of better implementation of legislation,
enhanced sharing of know-how and increased cooperation
on the operational level. It is against increasing the EU
expenditure on civil protection, as this is a responsibility of
national governments.

54 IPO, Gemeenschappelijk Landbouwbeleid na 2013 (November 2011).
62

C E S

4. Global Europe

The Netherlands stresses the importance of the EU’s ambitions
in its external policies, but it argues that these ambitions do not
necessarily require (much) more expenditure. It puts forward
three priorities for the 2014–20 period: (a) the European
Neighbourhood Policy, (b) fighting poverty, especially in
the poorest countries and (c) stability, security and crisis
management. Emerging economies such as China, Brazil and
India should no longer be supported by EU development
programmes.

5. Administration

The EC’s proposal to reduce the number of EU staff by
5% fits in quite well with the Dutch position. However, the
Netherlands is in favour of a nominal freeze of administrative
expenditure (whereas the EC proposal involves real growth
of administrative expenditure). Such a nominal freeze should
result from increased reforms of staff regulations, especially
of salaries and pensions, and decreased expenditure on
public relations, and also from opting for a single seat for
the European Parliament.55


The Dutch government is in favour of integrating the EDF

55 Although de facto a majority of the European Parliament’s work is now geared to its Brussels
site, it is legally bound to keep Strasbourg as its official home, meeting there for twelve sessions
a year lasting about four days each.

63

C E S

into the regular EU budget, especially because this would
make parliamentary oversight by the EP possible. It does,
however, recognise that such integration of the EDF into the
budget requires unanimity among Member States, which is
not attainable right now. It is in favour of integration as of
2020 and welcomes the EC’s efforts in that respect.

What goes for the EDF goes for all EU expenditure in
general. The Netherlands is against off-MFF expenditure,
as this decreases transparency of the EU budget, distorts
proper horizontal allocation and may provide disincentives
for budgetary discipline. This goes especially for expenditure
that is part of the current MFF (like ITER and GMES).


Generally, the Netherlands supports the EC in its proposals
to simplify and improve delivery of EU policies, especially
within EU cohesion policy. It supports the use of partnership
contracts. The same goes for the Dutch regional and local
authorities, who have been strong advocates of the partnership
contracts, but they stress that regional and local authorities
should be fully involved in these contracts.

As far as budgetary control is concerned, the Dutch central
government is in favour of a Member State declaration
(assurance statement) on the proper use of EU finances.
Currently the Netherlands is the only Member State that

64

C E S

issues such a statement. A single audit concept should be
used to minimise the audit burden. This position is shared
by the Dutch regional and local authorities.

Summary

In terms of negotiations, in all likelihood the net position,
and the magnitude of the correction the Netherlands will
receive in net terms, will be decisive for the Dutch position.
The proposed gross annual reduction of €1,050 million for
the Netherlands should be increased in such a way that the
Dutch net position improves with €1 billion annually. In the
Dutch view, the MFF 2014–2020 should be nominally frozen
at the 2013 level. Compared to the EC proposal there should
be less spending on cohesion policy and on administration.

According to the Netherlands, the EU budget should be fully
financed through GNI-based Member State contributions.
New EU own resources and/or EU taxes should not be
introduced. The choice made by the EC to have a seven-year
MFF is supported by the Netherlands. All proposed off-MFF
expenditure should be part of the MFF and integrated into
the annual EU budget.

Cohesion policy support should only be given to the poorest
regions in the poorest Member States and not to richer
regions (including the proposed transition regions), but it is
important to stress that this position is not shared by Dutch

65

C E S

regional and municipal authorities, who are in favour of an
EU-wide cohesion policy.

Direct support within the framework of the CAP should be
more targeted and less generic. The EC proposal to ‘green’
30% of direct support should be enhanced and should
include other policy objectives.

The EC should not increase its expenditure on civil protection,
as this is a responsibility of national governments.

Administrative expenditure should be frozen nominally, and
there should be a single seat for the EP.

Member States should be prepared to account for EU funds
received by issuing an assurance statement on the spending
of EU funds. The audit burden should be minimised by using
the single audit concept.

66

C E S

6. General conclusions
and recommendations

Stefaan De Corte

In this debate paper we looked at the positions both of the
European Parliament and of two ‘Council proxies’ on the
European Commission’s proposals for the next Multiannual
Financial Framework. The proposed MFF translates into
financial terms the European Union’s priorities for the next
seven years. Expressed as a percentage of EU GNI, and
excluding the items outside the MFF, the Commission’s
proposal represents a decrease compared to the MFF 2007–
2013 (commitment appropriations represent 1.05% of EU GNI
versus 1.12% EU GNI for the previous MFF). However, the
proposed budget for items outside the MFF will increase as
compared to the previous period.

Both the European Parliament and the Council accepted
the Commission’s proposal as the basis for the negotiation.
When looking into the Council’s and European Parliament’s
positions on the Commission’s proposal in more detail,
however, a first conclusion is that the Council does not (yet)
have an official negotiating position, while the Parliament’s
position on the next MFF is detailed in two resolutions. In the
debate paper, we overcame the lack of a Council position by
presenting two representative, although diverging, Member
States’ views.

67

C E S

A first recommendation would therefore be that it would
increase transparency of the decision-making procedure and
facilitate the negotiation between the different institutions, if
the Council were to formulate a clear and detailed opinion on
the European Commission’s proposal.

Broadly speaking, we conclude that the European Parliament
as well as certain Member States demand an increase of the
MFF compared to the 2013 level in real terms (1.06% of EU
GNI) or at least an MFF of the same level of EU GNI compared
to the previous MFF. On the other side of the spectrum are
Member States demanding at least a nominal freeze at the
2013 level. The European Commission proposed, in our view,
an astute compromise, as its proposal amounts to 1.05% EU
GNI in real terms and 1.11% EU GNI when items outside the
MFF are taken into account.

The most important arguments that are used to ask for an
increase of the EU budget are as follows:
• It is necessary to recognise the importance of the process
of European integration and accept that communitisation
of policy fields implies increased expenditure at EU level.
According to the same line of argument, additional
competences derived from the Lisbon Treaty need adequate
financing (e.g. Common Foreign and Security Policy).
• Additional financing needs, arising from short- and long-term
challenges the European Union is facing (growth and competi-
tiveness, climate change), must be met, as EU action in these
fields is more efficient and effective than action at national level.

68

C E S

The main argument used to oppose any increase in the EU
budget is that the budget should be an austerity budget, as
many European countries are in a period of fiscal consolidation.

We would recommend that the European institutions (European
Council, European Parliament and European Commission) keep
the long-term strategic objectives and interests of their citizens
in mind when reflecting on an adequate level of funding for
policies developed at the EU governance level. In order to reach
a compromise, it might be useful to bring other elements to the
negotiating table (e.g. what policy priorities are financed at EU
level, and what priorities at national level, own resources, etc.).

With regard to the length of the programming period, most
institutions agree on a seven-year period. However, Dutch
regional authorities as well as the European Parliament might
favour a 10-year period with a major review after five years.
However, we do not foresee that the length of the MFF will be
a major breaking point.

As with the overall size of the MFF, one could conclude there
are two opposing views with regard to own resource. In
this respect, the European Commission did not propose an
astute compromise, but a daring proposal to use a financial
transaction tax as well as a new VAT own resource to
replace the current GNI-based resource. Both the European
Parliament and one of the two Member States examined in
the paper favour the introduction of one or several genuine
own resources as agreed upon with the adoption of the

69

C E S

Treaty of Lisbon. However, our analysis also shows that there
is still room to manoeuvre in the choice of an own resource,
as the Parliament does not pronounce itself too clearly on
this. On the other side of the spectrum are Member States
that oppose the idea of increasing the own resources of the
EU. The main argument used is that the power to tax is a
matter of national sovereignty and should not be transferred
to the EU level.

The positions with regard to the rebates and corrections
are similar to those concerning a system of own resources.
With the argument of transparency and fairness, Member
States and the European Parliament call for an end of the
rebates and correction mechanisms, while the Commission
proposes corrections only in cases where a Member State’s
contributions represent an excessive burden to the Member
State. Those Member States benefiting from rebates or
corrections clearly want to maintain them.

When it comes to own resources and rebates and corrections,
we would conclude that both sides of the negotiation
table take a hard stance on their position, and room for
compromise is limited. One might think of phasing in a new
own resource over a period of time. However, a decision
on own resources is taken within the Council only (no co-
decision) and requires unanimity. Nevertheless, this decision
is part of the entire MFF negotiation package and cannot
be adopted or rejected separately. In addition, the decision
has to be validated by all national parliaments. Therefore, it

70

C E S

might be useful for the European Parliament to strengthen its
relationships and collaboration with national parliaments on
this matter.

The European Commission called its proposal, formulated in
follow-up to an extensive consultation round, A Budget for
Europe 2020. The use of the term Europe 2020 is a reference
to the EU 2020 strategy for smart, sustainable and inclusive
growth. As a consequence of this strategic orientation,
expenditure on cohesion policy will decrease, as will market-
related expenditure and direct payments within the common
agricultural policy. Instead, the Commission proposes to
reallocate resources to priority areas such as pan-European
infrastructure, research and innovation (competitiveness),
education and culture, security of the EU’s external borders
and external relations.

Broadly speaking, both the European Parliament and the
Member States we looked at in more detail support the
proposed strategic reorientation towards achieving the EU
2020 objectives of smart, sustainable and inclusive growth.
As well, they support the more ‘result-oriented’ approach, the
introduction of new conditionality provisions and the attention
given to simplification of the implementation rules. However,
the European Parliament and a Member State express
doubts about subjecting cohesion funds to sanctions in the
framework of macroeconomic conditionality linked to the
Stability and Growth Pact.

71

C E S

Looking into the positions on the different headings, one can
draw the following high-level conclusions.
• Smart and inclusive growth: This heading and its priorities
are seen as to be in line with the EU 2020 objectives.
Therefore, the Commission proposal could count on
overall support from both the Parliament and the Members
States. However, not all Member States fully support the
Connecting Europe Facility, as it will draw away funds from
cohesion policy and implies a new management system,
which will not bring simplification. The view that cohesion
policy could be addressed to the whole EU is backed
by some Member States and the European Parliament.
According to other Member States, it should be limited to
the poorest regions.
• Sustainable growth: Both Member States commenting in
this paper welcome the EC proposals but with qualification.
Some would favour more conditionality, while others would
like to see a CAP that recognises and narrows even more
the development differences in the agricultural sector
between the Member States.
• Security and citizenship: The increased emphasis on
migration and internal security are welcomed by both the
Member States, as well as by the European Parliament.
• Global Europe: Both the European Parliament and the
Member State that is in favour of an overall budget
increase would agree with a higher budget as compared
to the 2013 MFF level, to enable the EU institutions to
effectively execute their new competences derived from
the entry into force of the Lisbon Treaty. The Member

72

C E S

State opposing an overall budget increase argues that this
does not require (much) more expenditure.

When it comes to items carried out in the name of the EU or
as a consequence of EU priorities, but not financed within the
MFF, the Member State, opposing an overall budget increase,
calls for integrating all items within the MFF (European
Development Fund, ITER, GMES). Although the EP’s resolution
did not discuss this at length, its position vis-à-vis the EDF
is to integrate the EDF within the MFF. Both the Commission
and the Member State in favour of an overall budget increase
prefer to finance the items outside the MFF.

Generally, our analysis shows that all parties agree that the
current MFF needs to be changed to respond to new EU
priorities, and all parties also agree that the EU 2020 strategy for
smart, sustainable and inclusive growth forms a good compass
for this reflection. However, both on the overall envelope as well
as on the own resources, there are opposite views.

If those who demand austerity were to focus on the
evaluation of the effectiveness of each euro spent, and if
those who claim that the integration process requires at least
the same EU budget as well as a new own resource were
to accept the gradual phasing in of some of their demands,
there might be room to compromise.

Our analysis has shown that there is support for a more result-
oriented approach towards projects and policies financed with

73

C E S

the EU budget. Therefore, the proposal of the Commission to
conclude partnership contracts covering all EU funds under
shared management should be used to the full. The proposed
conditionality mechanism, based on a comprehensive set of
ex ante-defined requirements incorporated in the partnership
contracts, could give rise to the suspension and cancellation
of funding. In order to convince those who demand austerity,
it might be necessary to strictly implement this proposed
approach.

Next to strict application of conditionalities, those who support
an important EU budget should demonstrate the added value
of spending at the Community level. The EU objective of smart,
sustainable and inclusive growth might be the convincing
framework for this. However, this exercise will imply prioritisation
of choices between various headings as well as regions.

It is hard to explain to citizens that the EU institutions do not
respect all the provisions of the Treaty. Therefore, the institutions
might agree to introduce an own resource step by step.

74

C E S

About the authors

Stefaan De Corte is senior research officer at the Centre
for European Studies (CES), covering social, economic
and financial issues. Before joining the CES, he was an
economic policy advisor to the Belgian Minister of Foreign
Affairs and the Vice-Prime Minister. Prior to that he was a
policy evaluation consultant. He is a commercial engineer
and also holds a master’s degree in European Economics.

Nico Groenendijk is Jean Monnet professor of European
Economic Governance and co-director of the Centre for
European Studies at the University of Twente, Netherlands.
His main research interests are the EU budget, Europe 2020
and fiscal federalism within the EU.

Corina Suceveanu is a team member at the Centre for
European Studies, covering different issues and aspects
of the European Union and European integration. Before
joining the CES, she did her master’s degree in European
Political and Administrative Studies at the College of
Europe in Bruges, Belgium. Prior to this she studied political
science and cultural studies at Eberhard Karls University in
Tübingen, Germany.

Paweł Tokarski works as an expert at the Polish Institute
of International Affairs (PISM). He graduated from the
Jagiellonian University in Kraków and the College of Europe

75

C E S

(Natolin campus). Currently he follows a PhD programme
at the Warsaw School of Economics. At PISM, his research
interests include European economic governance, the
eurozone crisis, the EU 2020 strategy and the new EU
Multiannual Financial Framework 2014–2020.

Patryk Toporowski is an expert at the Polish Institute of
International Affairs. He graduated from the Warsaw School
of Economics, where he currently follows a PhD programme.
Formerly he was an expert at the Polish Ministry of Foreign
Affairs, where he was responsible for economic analyses
particularly in the area of EU own resources. At PISM he
focuses on economic integration in the European Union, in
particular, the EU budget and financial programming, growth
and jobs, and the Europe 2020 strategy.

76

C E S

Acknowledgments

A number of individuals assisted in the production of this
paper. Among them are Roland Freudenstein, Deputy
Director and Head of Research at the Centre for European
Studies. We are as well grateful to all those who made time
available for an interview. Finally, language editing was
provided by Marvin DuBois and the Communicative English
editing team.

77

C E S

Bibliography

Advisory Council on International Affairs (AIV). De financiën
van de Europese Unie, 2007.

Cohesion Policy as an Efficient, Effective and Territorially
Differentiated Response to EU Development Challenges,
Position of the Government of the Republic of Poland on
the Future of European Union Cohesion Policy after 2013,
Adopted by the European Committee of the Council of
Ministers on 18 August 2010, accessed at
http://www.mrr.gov.pl/rozwoj_regionalny/Polityka_spojnosci/
Polityka_spojnosci_po_2013/Debata/Documents/updated_
official_position_of_pl_cp_after_2013.pdf on 12 December 2011.

Deutsche Bank Research, EU Net Contributor or Net Recipient:
Just a Matter of Your Standpoint? (May 2011).

Dziś w Sopocie początek rozmów o przyszłym budżecie Unii
Europejskiej (28 July 2011), accessed at
http://www.euractiv.pl/prezydencja/artykul/dzi-w-sopocie-
pocztek-rozmow-o-przyszym-budecie-unii-europejskiej-002844

‘EU Budget Skirmishes Begin as Eight Countries Attack
Brussels’ Proposals’, EU Observer, 13 September 2011.

European Commission, A Budget for Europe 2020, COM(2011)
500 final.

78

C E S

------ A Budget for Europe 2020: The Current System of
Funding, the Challenges Ahead, the Results of Stakeholders
Consultation and Different Options on the Main Horizontal
and Sectoral Issues, Commission Staff Working Paper,
SEC(2011) 868 final.

------ EU Budget 2010 Financial Report, accessed at
http://ec.europa.eu/budget/library/biblio/publications/2010/
fin_report/fin_report_10_en.pdf on 13 December 2011.

------ The EU Budget Review, SEC(2010) 700.

------ The EU Budget Review: Communication from the
Commission to the European Parliament, the Council, the
European Economic and Social Committee, the Committee
of the Regions and the National Parliaments, COM(2010)
700 final, (Strasbourg, 19 October 2010), accessed at
http://ec.europa.eu/commission_2010-2014/president/pdf/
eu_budget_review_en.pdf on 12 February 2012.

------ Financial Framework 2007–2013, accessed at
http://ec.europa.eu/budget/figures/fin_fwk0713/fwk0713_
en.cfm on 1 December 2011.

------ Financial Framework 2014–2020, accessed at
http://ec.europa.eu/budget/biblio/documents/fin_fwk1420/
fin_fwk1420_en.cfm on 1 December 2012.

79

C E S

------ Financing the EU Budget: Report on the Operation
of the Own Resources System, Commission Staff Working
Paper, Annex to COM(2011) 500 final.

------ Proposal for a Council Decision on the System of Own
Resources of the European Union, COM(2011) 510 final.

------ Reforming the Budget, Changing Europe. A Public
Consultation Paper in View of the 2008/2009 Budget Review,
SEC(2007) 1188 final.

European Parliament Directorate General for Internal
Policies, Policy Department B: Structural and Cohesion
Policies, Regional Development, The Economic Return of
Cohesion Expenditure for Member States (May 2009), 8,
accessed at
http://www.europarl.europa.eu/meetdocs/2009_2014/
documents/regi/dv/pe419106_ex_/pe419106_ex_en.pdf on
14 December 2011.

------ Investing in the Future: A New Multiannual Financial
Framework (MFF) for a Competitive, Sustainable and Inclusive
Europe, Resolution (8 June 2011), accessed at
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//
EP//TEXT+TA+P7-TA-2011-0266+0+DOC+XML+V0//EN on 1
February 2012.

80

C E S

------ On the Future of the European Union’s Own
Resources, Report (14 March 2007), accessed at
http://www.europarl.europa.eu/sides/getDoc.do?type=
REPORT&reference=A6-2007-0066&language=EN#title4
on 1 February 2012.

European Union, Treaty on the Functioning of the European
Union (Treaty of Lisbon, TFEU), accessed at
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C
:2010:083:0047:0200:EN:PDF on 1 February 2012.

European Court of Auditors, Annual Report 2010 (2011).

IPO. Gemeenschappelijk Landbouwbeleid na 2013
(November 2011).

Pietras, J., Przyszłość budżetu Unii Europejskiej. Spójność
celów, polityk i finansów unijnych, Warsaw: DemosEUROPA,
January 2008).

Poland, Ministry of Agriculture and Rural Development, The
Future of the EU Common Agricultural Policy beyond 2013
(Warsaw, May 2009), 5–6, accessed at
http://www.minrol.gov.pl/eng/content/view/full/4009 on 12
December 2011.

Poland, Ministry of Foreign Affairs, Oczekiwania Polski wobec
propozycji Komisji Europejskiej w sprawie nowych Wieloletnich
Ram Finansowych UE (Warsaw, 16 February 2011).

81

C E S

Poland, Ministry of Foreign Affairs, Stanowisko RP w sprawie:
Pakiet Wieloletnich Ram Finansowych UE na lata 2014–2020
(Warsaw, January 2012).

Poland, Ministry of Regional Development, Wpływ funduszy e
uropejskich na gospodarkę polskich regionów I konwergencję
z krajami UE, Report 2010, (Warsaw, 2010), 5, accessed at:
http://www.mrr.gov.pl/rozwoj_regionalny/Ewaluacja_i_
analizy/Raporty_o_rozwoju/Raporty_krajowe/Strony/Wplyw_
FE_na_gospodarke_polskich_regionow_i_konwergencje_z_
krajami_UE_Raport_2010.aspx on 12 December 2011.

Poland, The Government of the Republic of Poland Official
Position on the Commission Communication Conclusions
of the Fifth Report on Economic, Social and Territorial
Cohesion, Approved by the Committee for European Affairs
of the Council of Ministers on 25th January 2011, 10,
accessed at
http://ec.europa.eu/regional_policy/archive/consultation/5cr/
pdf/answers/national/poland_national_government_2011_02_01.pdf

Polska Agencja Rozwoju Przedsiębiorczości, Raport o
stanie sektora małych i średnich przedsiębiorstw w Polsce
(2010), accessed at
http://www.parp.gov.pl/files/74/81/380/9282.pdf on 12
December 2011.

82

C E S

Rettman, A., ‘Polish President Airs Concerns on EU Budget’,
Euobserver.com, 1 September 2011, accessed at
http://euobserver.com/18/30711 on 12 December 2011.

‘Secret Bid to Freeze EU Budget’, Financial Times, 17
December 2010.

Sopot, Dziś w Sopocie początek rozmów o przyszłym
budżecie Unii Europejskiej (28 July 2011), accessed at
http://www.euractiv.pl/prezydencja/artykul/dzi-w-sopocie-
pocztek-rozmow-o-przyszym-budecie-unii-europejskiej-
002844 on 12 December 2011.

Stockholm Programme, accessed at
http://europa.eu/legislation_summaries/human_rights/
fundamental_rights_within_european_union/jl0034_en.htm
on 6 February 2012.

‘The Battle for the EU’s Long-term Budget’, European
Parliament/News, accessed at
http://www.europarl.europa.eu/news/en/headlines/content/
20110429FCS18370/html/The-battle-for-the-EU%27s-long-
term-budget on 12 December 2011.

The Netherlands, Ministry of Foreign Affairs, Dutch Priorities
for a Modern EU Budget. Response of the Netherlands to
the Issues Paper (2008).

83

C E S

The Netherlands, Tweede Kamer der Staten-Generaal,
Parliamentary Paper 21 501-20, no. 529 (28 March 2011),
accessed at
https://zoek.officielebekendmakingen.nl/dossier/21501-20/
kst-21501-20-529 on 14 December 2011.

Parliamentary Paper 21 501-20, no. 553 (2 September 2011),
accessed at
https://zoek.officielebekendmakingen.nl/dossier/21501-20/
kst-21501-20-553 on 14 December 2011.

Parliamentary Paper 32 833, no. 6 (28 October 2011),
accessed at
https://zoek.officielebekendmakingen.nl/kst-32833-6.html on
14 December 2011.

Parliamentary paper 32 502, no. 19 (Plasterk/Voordewind
Resolution, 31 May 2011), accessed at
https://zoek.officielebekendmakingen.nl/kst-32502-19.html

Tokarski, P. and Toporowski, P., ‘The European Commission’s
Proposal for the Multiannual Financial Framework 2014–2020:
More, for the Same’, Bulletin PISM, 77/294 (26 July 2011).

84

C E S

Tokarski, P. and Toporowski, P., ‘The EU’s Multiannual
Financial Framework 2014–2020: Current State of the Debate’,
Bulletin PISM 48/265 (13 May 2011).

VNG/IPO. The European Union beyond 2013. Working Together
on a Stronger and More Sustainable Europe (April 2008).

VNG/IPO. Van Europees cohesiebeleid naar een duurzaam
Europees gebiedsgericht ontwikkelingsbeleid (January 2010).

VNG/IPO. Reactie van de Nederlandse provincies en
gemeenten op de conclusies bij het vijfde cohesieverslag
(January 2011).

Vrijheid en verantwoordelijkheid. Regeerakkoord VVD-CDA,
(September 2010).

85

The Next Multiannual Financial Framework: From National Interest to Building a Common Future

More Related Content

Similar to The Next Multiannual Financial Framework: From National Interest to Building a Common Future

More from thinkingeurope2011

The Next Multiannual Financial Framework: From National Interest to Building a Common Future