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Luxembourg throws its weight around

Posted by Helen Wednesday, December 22, 2004

Hands up those who knew that the next EU Presidency is Luxembourg’s. Well, it is and its Prime Minister, Jean-Claude Juncker, is beginning to throw his weight around.

The next six months should see an agreement on the 2007 – 2013 EU budget (during which period, incidentally, there will be national elections, European elections and a new Commission – none of that will have an effect on the budget, which, once agreed, rolls on).

Will it be agreed, though? And on what terms? As we know, the supposedly free-marketeer Commission President Barroso has called several times on the EU donor countries to raise their contribution to the EU budget, in order to enable the creation of new EU projects. Not one’s usual definition of a free-marketeer or liberal economic thinker, but let that pass.

Now we have M Juncker joining the chorus. As all incoming presidential leaders, he has made a statement about the next six months:

"If we don't arrive at an accord on the outlines by June 2005, it will be impossible to enact the programmes which should be available on January 1,2007."
That sounds a little alarmist, but he needs to be in order to whip the members into submission. The trouble is that it is not just an agreement he wants but an agreement on the terms he is outlining. These are not very popular with the biggest contributors, Austria, Britain, France, Germany, the Netherlands and Sweden. They insist that their contribution should be 1 per cent of Gross National Income (GNI). The Commission and the incoming Presidency would like to raise the contribution to 1.14 per cent, in order, as AFP says:
“…to enact legislation for ambitious infrastructure projects and subsidies for the bloc's newest and relatively poorer members foreseen by the EU”.
The words cloth and coat and cutting come to mind. The eurozone countries are in economic trouble, with the two biggest, France and Germany, in greater trouble than the others. They need to concentrate on those long delayed and almost impossible reforms that will drag them out of the rut. Continuing economic weakness with an over-strong currency spells disaster.

While we are on the subject, whatever happened to the Lisbon process? It was meant to turn the European economy, whatever that might be, into the most efficient, knowledge-driven one by 2010. We are almost half-way there and nothing much has happened apart from an ever thicker mesh of regulations being spun by the giant spider in Brussels and, for entertainment, a large selection of scorecards that are meant to show entrepreneurial spirit.

In the circumstances, the idea of handing over more money to the EU for various projects, whose usefulness is doubtful and whose accountability is non-existent, tends to be greeted with scepticism by the donor countries.

M Juncker is not despondent. He has six months to find a compromise between the position of the donor countries (“Can’t pay, won’t pay”) and that of the Commission and Presidency (“The Don has a small proposition to make.”). Of course, if he does not succeed, he will be able to hand to mess on to his successor, Tony Blair. And just in case anyone thought his task was too simple, M Juncker has also announced that he intends to reform the Growth and Stability Pact. It is not stupid, he insists, non, non, non. But it could be made more intelligent.

We await the actual Luxembourg Presidency with some interest.