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What Germany Wants From the EU Budget

Sean SinicoDecember 15, 2005

Battle lines have been drawn between the French, who want to protect agriculture subsidies, and the British, who are looking to keep their EU rebate. Meanwhile, the Germans have kept their expectations quiet.

Preparing Brussels for the big family gatheringImage: AP

While Germany's new Chancellor Angela Merkel watches Britain and France bicker over rebates and agriculture spending during the crucial EU budgetary meetings in Brussels on Thursday and Friday, there are some compromises she won't be willing to take back to Berlin.

One of Germany's foremost concerns will be limiting the size of the check it mails to the EU, according to Peter Becker of the German Institute for International and Security Affairs in Berlin.

"One of the main interests will be that the German net-payer position should not increase excessively," he said, adding that where the actual cuts are made is less important. "The German government is relatively flexible in how they reach the goal."

Curtailing payments to Brussels

Euroscheine in Geldschublade
Germany wants to keep more money at home, out of EU handsImage: Bilderbox

Keeping the bill as low as possible has been Germany's aim since 2003, when it led fellow net contributors in telling Brussels to keep the budget to within 1 percent of the union's gross national income. The demand is the result of logical reasoning, according to Roman Maruhn of the Center for Applied Policy Research in Munich.

"There are calculations that show that no matter what political area the EU makes more money available to, it always costs the German government more than it receives," he said. "That is why Germany is following a goal of keeping the EU budget down."

Germany has long been Europe's biggest net contributor, and with the EU's biggest economy, it was responsible for about 22 percent of 2004's budget of 99.7 billion euros ($120 billion).

Protecting eastern Germany

During her first European financial negotiations, Merkel will also aim to retain the funds Brussels sends to structurally-weak areas of eastern Germany, despite the addition of 10, mostly poorer, member states who would otherwise receive the money.

Gemeinschaftswerk Aufschwung Ost in Magdeburg
Keeping EU money flowing to eastern Germany is one of Merkel's goalsImage: dpa ZB-Fotoreport

"Another goal for the Germans in these negotiations is to make sure the eastern German states continue to receive the highest level of support from the structural funds without these funds being heavily reduced," Becker said.

After spending last week talking to nearly half of the European Union's 25 heads of state, British Prime Minister Tony Blair, whose nation holds the rotating EU presidency until the end of 2005, brought out a new budget proposal Wednesday that allocated more money to the structural and regional aid.

Berlin a bridge between Paris and London

The new framework, which increased spending to 849.3 billion euros, or 1.03 percent of gross national income, from the 847 billion that was widely-rejected last week, maintains the cherished British rebate and calls for review of the entire budget in 2009, a measure Paris rejects to prevent cuts to the 10 billion euros it receives from EU agriculture payouts.

Chirac und Merkel
Merkel has already visited Chirac and BlairImage: dpa

"Germany can build a bridge," Maruhn said. "France is actively working against the British rebate, Great Britain is actively working against the common agriculture policy, and Germany has a more moderate position in both points and is financially between Great Britain and France."

European Commission President Jose Barroso agreed Germany is in a position to help Europe is best able to move forward when Germany is active.

"'Europe has always moved forward when Germany has taken a mediating role, he said in an interview with Germany's Bild am Sonntag newspaper.

But working to close the considerable gap along the English Channel may not be enough. Poland, Spain, Lithuania and the Netherlands have all voiced varying degrees of opposition to the draft, and the budget needs the unanimous support of all member states to be ratified.

Success far from certain

EU leaders already failed to reach agreement on the budget in June, and while the politicians have said they want a compromise this week, no one expects them to make a bad deal simply for the sake of crossing it off their to-do list.

The bloc, which has been reeling since French and Dutch voters rejected the European Constitution in June, is in dire need of a success story, even though failure would not be a complete disaster as a deal can still be agreed to next year.

"The last time there were negotiations agreement was reached nine months before the finance framework went into effect," Maruhn said. "Now, with an aggravated starting point and considerably more EU partners, I have a bit of a problem seeing agreement coming sooner than occurred six years ago when there was less potential for conflict."