EU reaches tentative budget deal, but NGOs still worried

Janusz Lewandowski, member of the European Commission in charge of financial programming and budget, gives a press conference following the adoption by the EC of the 2015 EU draft budget. Photo by: Etienne Ansotte / EU

Negotiators for the European Union’s three institutions finally agreed Wednesday on a preliminary deal to salvage next year’s budget — but nongovernmental organizations warned that the danger of a financial crisis has not yet been averted, as development funds are still at risk of drying out by mid-2015 and debts could continue to build up.

Representatives of the European Council, the commission and the parliament reached the initial consensus that spending in 2015 will be set at 141.2 billion euros ($175.9 billion) and commitments at 145.3 billion euros. Parliament negotiated additional funding for research and education, as well as an extra 32 million euros for foreign policy actions, including 10 million euros for humanitarian actions.

The parties also agreed on an extra 4 billion euros to help the EU cope with its growing pile of unpaid bills incurred in 2014. Because of the increasing gap between payments and commitments, the EU’s debts have increased from 5 billion euros in 2010 to more than 23.4 billion euros at the beginning of 2014. According to some estimates, this figure could soon could balloon to up to 28 billion euros.

"We secured a substantial amount to ease the strain on contractors, like small and medium sized enterprises, local collectives, and nongovernmental players, Eider Gardiazábal Rubial, a Spanish center-left member of the European Parliament who participated in the negotiations, told Devex. “Nevertheless, this is far from what we wanted."

Jean Arthuis, a French liberal MEP, explained that it was the member states themselves, despite their own budgetary constraints, the ones “that agreed to enter into contracts that need to be paid.”

"We cannot go on rolling invoices over from year to year due to a lack of resources, just watching as cash-strapped contractors suffer and the EU loses its credibility as a reliable partner,” Arthuis told Devex.

The commission is now tasked to come up with a plan and a timetable to reduce the amount of claims to a sustainable level by 2016. Commission Vice President Kristalina Georgieva said in a press conference that “this agreement paves the way for a sound 2015 budget, supporting investment in competitiveness, growth and jobs” and added she hopes the deal will be approved quickly “so we can get down to work.”

The result of the agreement is close to the proposal tabled by the Commission last month, after its earlier draft budget was rejected by the council for being too high, while the parliament demanded more expenses and funds to stop the mounting debts spilling over into next year’s budget. Ultimately, the council — which represents the 28 EU member states — reviewed its initial position and significantly reduced the cuts in payments that it had first adopted.

Agreement is ‘bare minimum’ — NGOs

The European NGO community welcomes the agreement, but insists more needs to be done.

“This is a welcome first step to face the immediate cash crisis that threatens many EU development and humanitarian aid programs around the world,” said Karine Sohet of Concord, while Alexandra Makaroff, head of Plan International’s EU Office, called the deal “the bare minimum required for the commission to function and fulfil its obligations to partners around the world.”

A particular point of concern is the financial situation of EuropeAid, the directorate-general responsible for EU funding of development projects. It still faces a 1.3 billion euro funding gap and the well may already run dry by mid-2015.

“The impact of this will be felt far and wide, with fewer contracts signed and beneficiaries forced to pre-finance their projects,” Makaroff warned. “We are already seeing this happen now. Ultimately, millions of women, men, girls and boys around the world who rely on EU aid to help pull themselves out of poverty will feel the effects of this crisis.”

European NGOs hope the Commission’s plans will help to avert the threat posed to the EU’s budget by unpaid bills spiraling out of control, but this shouldn’t be done by just lowering commitment levels down to payment levels.

“If the EU wants to support sustainable development then it must ensure sustainable and predictable financial resources,” Soher said.

Jens Geier, a German socialist MEP who sits in the parliament’s budget committee, stressed that member states “can no longer beat around the bush” and urged them to “recognize that the EU is underfunded and therefore cannot fulfil all the obligations it has taken on itself.”

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About the author

  • Diederik Kramers

    Diederik Kramers is a freelance correspondent in Brussels covering EU and NATO affairs. A former spokesperson and communications officer for UNICEF and UNHCR, he previously worked as foreign desk and Eastern Europe editor for the Dutch press agency ANP and as editor-in-chief of the Dutch quarterly Ukraine Magazine.