There is clearly a lot of relief that the Council was able to agree a budget for the Union – however the budget which has emerged is not one which will stimulate growth, create jobs or increase competiveness.
It could actually lead to a structural deficit and it does not help Ireland or any country which wants the European Union to help its citizens at this time of deep crisis.
As we have heard from the Taoiseach, there are a lot of claims being thrown around about a more dynamic Union – but at the heart of this budget agreement is a refusal to unleash the potential of collective action against recession and unemployment.
No matter how you dress it up, at a time when the challenges faced by the Union are rising, its resources to tackle them will fall.
There are 26 million people out of work in the Union today. Many live in regions which have little or no access to funding or opportunities to help create new jobs. This is the very moment where the ideals of the Union should have come into play.
At a time when faith in the Union has fallen, the most consistent hope of citizens for the Union is that it will help on jobs and growth.
We should have had stronger countries accepting that we all benefit when we help the Union as a whole to prosper. Unfortunately, a deeply short-sighted approach has prevailed which threatens to hold back the Union over the next seven years.
The communiqués from summits such as this are always padded with excess verbiage. Often the preambles bear almost no relation to the details of what has been agreed. In the case of this summit, rarely has the gap between the rhetoric of the leaders and the reality of their agreement been so large.
In the opening paragraph of a 47 page document the leaders state that they have based their agreement on the fact that we;
Must ensure that the European Union’s budget is geared to lifting Europe out of the crisis. The European Union’s budget must be a catalyst for growth and jobs across Europe, notably by leveraging productive and human capital investments.
The headings of the agreement talk about “Smart and Inclusive Growth” and “Sustainable Growth” and other worthy goals.
To take it at face value you would imagine that it marks a major departure for the Union – that something big has been agreed.
The actual financial allocations detailed in the technical sections show that almost nothing will actually be done to fulfil the agreement’s stated objectives.
Leaders have decided not just to contain spending which occurs through the Union, they have agreed to actually start shrinking its significance within the European Economy.
The Union’s Budget will now fall as a percentage of Europe’s Gross National Income from 0.98% to 0.95%.
How can anybody credibly claim that the EU will play a leading role in promoting jobs and growth when it represents such a tiny and falling percentage of Europe’s economy?
The Budget does include a number of new measures or expansions in important programmes. Added together they will not make a significant difference.
What makes this worse is that these expansions come at the price of significant cuts elsewhere in the budget – with agriculture taking by far the biggest hit.
The leaders have agreed to cut funding for the Common Agricultural Policy by 10% in today’s prices. This amounts to €4 billion per annum. It is a very damaging decision.
Many people like to dismiss the CAP as part of the ‘old’ EU which is getting in the way of more dynamic spending. This shows a complete misunderstanding of both the CAP and the basis upon which countries agreed to join the Union.
Agriculture is the only area where the EU has a fully-funded policy which ranges across all issues in a sector.
It has given Europe food security and it helped preserve much rural life which would otherwise have been under threat. It is flawed, but it should be valued as a great success and not put under constant pressure.
Our major concern is that the 10% cut that the Taoiseach and his colleagues agreed may lead to a restructuring of payments which does unacceptable damage to the livelihoods of many farmers.
We absolutely reject the idea that payments should be concentrated into fewer hands – prioritising so-called commercial farms at the expense of other farmers.
This would be a betrayal of the small and medium farmers who are the lifeblood of much of rural life in our country – and of the social dimension of the Union.
Many of them have to combine farming with other income in order to keep going. An attack on their income support payments could force many off the land.
If we lose them now we have lost them forever and our country will always regret it.
The Taoiseach should be aware that no amount of spin will cover up a bad agreement in CAP reform. All classes of farmer deserve to be treated fairly and we will do everything we can both here and in Europe to support them.
This trade off between agriculture and tokenistic increases for other policies is the dark reality of the agreed budget.
One area which shows this very well is youth unemployment. This is supposedly a priority for our Presidency of the Council and for the entire Budget.
In the end what has emerged is a grand total of €6 billion to be spent through the entire Union across the next seven years. The economic impact of this will be, at best, negligible.
The ‘Youth Guarantee’ is one of many Union policies which cannot be achieved with the funding included in this Budget.
Another is that Europe will take the lead in innovation through advanced research. The plans outlined by Commissioner Geoghegan Quinn show how this could be done with genuinely world-beating collaborations across the Union.
Unfortunately her budget will not receive anything near what is required to meet its objectives.
A bad development in the agreement has been the additional limit which has been placed on the total of payments, as opposed to commitments, which the Union can make.
The difference between these two figures has traditionally allowed some flexibility to reward well-performing countries and to fund new initiatives.
For example, the modest jobs and growth package agreed early last year was entirely funded this way. Ireland has also always done well out of this process because we run efficient and effective programmes.
What is worst with this Budget is that it has been significantly driven by an agenda which is not willing to unleash the potential of the Union. A number of governments argued that the Union should be cut back just as they are cutting back.
What they didn’t acknowledge is that the Union never expanded in the way that governments did before this recession. The increases in its budget over the years have never been dramatic and it has stayed at roughly 1% of Europe’s economy.
Equally, there is no country in the Union which is committing to keeping spending to a low set percentage of national income for seven years.
The great straw man of ‘Eurocrats’ supposedly burning our money in a spree of waste falls apart when you see an administrative budget set at 5% of the total. Certainly there are many administrative reforms still required, but there is no pot of gold waiting for us if we slash administrative costs.
President Van Rumpouy had a difficult job in getting it agreed at Council. It may well be that no other agreement was possible given the destructive agenda of some leaders who came looking for a reason to wield the veto. The best construction which can be put on this deal is that it is not good but it is better than nothing.
The early indications are that there will be some trouble during the process of getting the Parliament’s agreement to the Budget. The group leaders reacted very strongly on Friday.
They rightly believe that the Council is short changing Europe and the citizens who look to the Union for help.
Ultimately, the ratification process may involve some modifications of the deal – this would be no bad thing. However it is unlikely that the money available to the Union will increase by more than a token amount.
What we cannot do is wait for another seven years before trying a new and more ambitious approach is taken to the work of the Union.
The lack of a strong fiscal base remains one of the core flaws in the working of the Eurozone and it is a great weakness for the entire Union at this time of crisis.
This way of funding and limiting the Union’s budget has failed and should be replaced.
If this is to happen Ireland needs to speak up and support a more radical reform of the Union. We should abandon the policy of opposing reform if a treaty might be required and should say clearly that the current approach isn’t working.
We should not sit on the sidelines when the British Tory Party works to push its destructive agenda of trying to gut the Union.
The list of demands made by Prime Minister Cameron amounts to saying that they will only stay in the Union if it stops being the Union. The most recent opinion polls in his country suggest that his ‘grand gamble’ isn’t working at home and it shouldn’t be allowed to progress in Europe.
The summit did not address banking issues, including the slow and poor progress being made on the banking union. I will address this area in more detail later today in the debate on the promissory notes.
In relation to other matters, the summit made some reference to trade, though of no great significance. Ireland should continue the policy of opposing the ‘trade deals at any cost’ strategy of some. We should retain the right to prevent key parts of our societies from being undermined by unbalanced deals.
It is amazing that the escalating horse meat controversy was not raised at the summit.
Since the first days of this controversy I have been calling for concerted European action. The least that should have happened at the summit was an acknowledgement of what has happened and an agreement to call for a coordinated response.
For some reason our government has waited until this week to do anything through its presidency of the Council. I welcome the meeting of agriculture ministers which has been called but it is already very late.
As with the entire European agenda, we need more urgency and ambition.