EU Agrees on Budget Framework for
2007-2013

Brussels: Chancellor Merkel and President Chirac during the summit. BPA photo

The European Union has once again proven its ability to function. A Franco-German compromise proposal brought a breakthrough at the EU budget talks in Brussels. The European heads of state and government approved a budget of 862.4 billion euros for financial period 2007-2013. Chancellor Angela Merkel called the result "a hopeful sign for the development of Europe".

"We got a good agreement for the future of Europe," Merkel told the press on December 17, following the conclusion of what had been difficult negotiations. She said this gives the EU planning security that will be of particular importance to new member states in their effort to catch up in terms of infrastructural development.

Compromise reached on rebate and revision clause

Merkel thanked the UK Presidency for its willingness to compromise, adding that a reduction of the British rebate will help cover the costs of EU enlargement. The United Kingdom agreed to reduce its rebate by 10.5 billion euros in the coming financial period.

In exchange for this France agreed to accept a revision clause, meaning in effect that the Commission will issue a report in 2008 or 2009 on the basis of which EU leaders will be able assess whether the budget structures are still appropriate or need to be revised. Changes will be possible on a unanimity basis. It was felt that this kind of flexibility is needed in order to be able to react quickly to changing conditions, Merkel noted.

German proposal accepted

The European Council accepted the compromise proposal Germany put forward with regard to the overall amount of the EU budget, i.e. 862.4 billion euros, corresponding to 1.045 percent of gross national income. This is less than the 1.06 percent or 871 billion euros proposed by the Luxembourg Presidency in June. Last year the European Commission had called for 1,025 billion euros or 1.24 percent of GNI.

More money for eastern Germany and border regions

In the coming budget period the eastern German states will receive an additional 225 million euros in EU funding for infrastructural development. Rules governing the use of these funds will be more flexible, making it possible to set up co-financing arrangements with money from private sources. New member countries are already benefiting from this approach. EU support in the amount of 75 million euros is to be made available for the development of border regions in Bavaria.

Originally 100 million euros more in EU assistance had been planned for Germany, but Chancellor Merkel opted to cede this money to Poland for the development of particularly weak regions there, saying that this would be a good investment and in the interest of both countries.

Merkel said she sees this resolution of the budget dispute as an encouraging sign of the EU's ability to function normally, adding that what was initially a very tense situation was supplanted by "a spirit of cooperation that makes us optimistic we will continue to be able to resolve problems in the future."

Macedonia named a candidate country

The EU leaders confirmed Macedonia as a candidate for accession to the European Union but stopped short of setting a date for the beginning of negotiations, agreeing that discussions need to be held first on the EU's further enlargement strategy.

December 20, 2005

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