EU: Ireland could face major cuts in EU funding under a new proposal from Luxembourg's EU presidency for the union's next seven-year budget plan.
The compromise plan, which was sent to all 25 member states yesterday, envisages spending commitments more than €100 billion lower than those proposed by the European Commission.
The regional aid budget would be €40 billion lower than in the commission's proposal and spending to promote competitiveness would be €50 billion lower.
Irish officials were studying the proposals yesterday in advance of a special meeting of EU foreign ministers in Brussels on Sunday. "We know we are in for a hit in relation to regional funds," one official said. "It's just a question of how big it will be."
Under the presidency proposal, spending on farm subsidies would remain until 2013 at the levels agreed in a deal among EU leaders in 2002. The plan leaves open, however, the possibility of funding farm subsidies for Romania and Bulgaria, which are expected to join the EU in 2007, from within the agricultural budget earmarked at present for 25 member states.
Such a move, which the Government is resisting strongly, would lead to an effective EU-wide cut in farm subsidies.
The most hotly disputed issue in the 2007-2013 budget plan, known as Financial Perspectives, is the future of Britain's budget rebate, which was secured by Margaret Thatcher at a summit in Fontainebleau in 1984.
Britain insists that the rebate, which was worth €4.6 billion last year, remains justified to prevent British taxpayers bearing an unfair share of the cost of running the EU.
At a meeting in the French town of Nancy yesterday, however, the leaders of Germany, France and Poland insisted that the British rebate must not survive in its present form.
The presidency proposal would cap the British rebate in the region of last year's level and reduce it progressively.
The proposal says: "Considering the subsequent substantial changes in relevant circumstances, such as the decrease in agriculture expenditure as a proportion of the budget, the increase in cohesion expenditure as a result of successive enlargements and the increase in the UK's relative prosperity to amongst the highest in the Union, the amount of the UK budgetary correction should be fixed in 2007 on the basis of an average over a period prior to the most recent enlargement and sufficiently long to be representative.
This amount should be set on a downward path from the following year."
The proposal would introduce measures to ensure that Germany, the Netherlands and Sweden did not bear an unfair burden in terms of net contributions to the EU budget and would freeze the level of contributions to the budget from VAT at 0.30 per cent.
Under the compromise plan, the European Commission would be asked to present by 2010 a review of EU revenue, known as "own resources", including the possibility of "creating new autonomous own resources".
The commission's chief spokeswoman yesterday described the presidency proposals as "a bit disappointing", adding that commission president José Manuel Barroso did not want "a cut-price Europe".
The commission's own proposals for spending commitments would cost €1,026 billion over the seven-year period from 2007-2013, or 1.26 per cent of the EU's gross national income (GNI).
The presidency's proposal, which would cost just under 1.1 per cent of GNI, is still too generous for the EU's six biggest net contributors - Germany, France, Britain, the Netherlands, Sweden and Austria - who want to cap the budget at 1 per cent of GNI.
EU spending commitments plan payouts from the budget for a particular period, part of which are made after this period ends and are thus always greater than actual spending over the period.
Luxembourg's prime minister, Jean-Claude Juncker, will hold intensive talks with other EU leaders early next month in the hope of agreeing a deal on the budget at a summit in Brussels on June 16th.