Ireland still a net beneficiary of EU budget after 40 years

Sat, Feb 9, 2013, 00:00

Analysis:The last few days were an example of what the EU does best – compromise

It comes around only once every seven years, but reaching agreement on the EU’s multi-annual financial framework (MFF) is notoriously tricky.

In many ways the EU budget is the perfect example of the European ideal of collectivism in action. The principle of individual member states contributing financially to a pool that is then redistributed to countries on the basis of need has underpinned the European project since the outset.

But, like most noble ideals, it is difficult to implement in reality. The fact that discussions on this MFF coincided with a period of austerity across the bloc increased the pressure on negotiators, as they tried to shake off an image of an over-resourced and over-remunerated European Union.

In the end, Britain’s calls for cuts to the EU’s administration budget were heeded, with David Cameron securing a hefty €1 billion in cuts to expenditure on salaries, pensions and administration costs of the union’s 55,000 staff.

While Britain was the driving force in this set of negotiations, ultimately the last few days were an example of what the EU does best – compromise.

Despite the noises made by the bloc’s biggest contributors, the final set of discussions was dominated by the need to keep disparate countries happy.

Positive

Denmark, for example, succeeded in securing a rebate arrangement worth €130 billion. Protests by eastern European countries like Romania and the Czech Republic in the final hours were answered with tweaks to cohesion funding arrangements. The €6 billion youth employment initiative was a nod to countries with youth unemployment problems like Spain, Greece, Portugal and Ireland, while the relative support given to the Common Agricultural Policy was a bow to France.

The outcome was positive for Ireland. While a cut to the Cap had been expected – the proportion of the EU budget is eventually expected to fall as low as 20 per cent – agriculture spending was protected, relatively speaking, though the full implication of EU funding on farmers rests on the outcome of ongoing talks on the reform of the policy.

Ireland also received some extras – the Border, Midland and Western region will get an extra €100 million under the cohesion heading, while the Northern peace process will receive €150 million. We should also benefit from the €6 billion youth employment initiative, though details on how this will operate have yet to emerge.

Most significantly, yesterday’s deal confirms that, after 40 years, Ireland is still a net beneficiary of the European Union budget, a statistic that perhaps tells its own story about Ireland’s economic journey in the last decade.

For now, Ireland’s attention will focus on securing European Parliament support for the budget deal. It will be a key responsibility of the Irish presidency for the remainder of its tenure. Gaining agreement on a budget framework between member states was a good outcome for Ireland as the first summit of its six-month presidency draws to a close.