17 December 2003

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Malta not in firing line of Germany’s proposed EU budget cap

By Matthew Vella
Foreign Ministry sources yesterday told The Malta Financial and Business Times that the warning shots fired by the six EU countries calling for EU spending to be capped could only be a matter of "posturing" in the wake of failed talks at the IGC on the EU Constitution.
"It is still too early to comment on such a move. Following the outcome of the IGC, it seems the six Member States are sending a sort of warning to Spain and Poland not to play games in future talks on the Constitution."
In a letter sent to Commission President Romano Prodi, six big contributors to the EU coffers – France, Germany, the Netherlands, Sweden, UK and Austria – said that EU expenditure should not exceed one per cent of the EU's gross national income (GNI) from 2007 onwards.
"In truth this is just a letter. The funding allocated to Malta was negotiated with the European Union and the Member States signed up to it. Changes in the level of funds destined to Malta are not expected. The move has been mainly directed to Spain and Poland," foreign ministry sources told this newspaper.
Main EU paymaster Germany has been the most vocal in demanding a curb on massive EU subsidies. Germany had warned the Spanish and Polish not to hold up talks on the constitution beyond the end of the year, arguing that they would be more complicated if conducted alongside future financial negotiations.
Spain and Poland are seen as the main targets of this move after these two countries were blamed by some for the collapse of talks on the new EU constitution over the weekend. Both countries are expected to be the biggest net beneficiaries of the upcoming 2006-2013 budget with subsidies benefiting agriculture, industry and infrastructure projects. They strongly opposed the qualified majority voting system which employs a double majority – more than 50 per cent of the Member States, representing 60 per cent of the EU population.
Failure for Italian Prime Minister Silvio Berlusconi to try and win consensus between the EU Member and acceding States has resulted in strong power play emerging from the ashes of the IGC talks on the future development of the EU.
In their letter, France, Germany, Britain, the Netherlands, Austria and Sweden said average expenditure during the next EU budget period of 2007-2013 should be stabilised at current levels, and should not exceed 1 per cent of gross national income. The current annual budget of nearly ¤100 billion (Lm40bn) is equivalent to around one per cent of GNI. The European Commission rejected the request last night, arguing that it was incompatible with requests from member states for the EU to take on new tasks.
Romano Prodi, the President of the European Commission, said in a statement: "We will study these ideas seriously but, with only one per cent of gross national income, it will simply not be possible to do what these member states, and all others, expect from us."

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Editor: Saviour Balzan
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