Friday, 29 October 2010

Will Cameron yet freeze the EU budget?

David Cameron's strategy to secure a freeze in the EU budget may be becoming clearer.

It was, of course, never in prospect that all the EU's member governments and institutions would agree to a zero percent increase in the EU's spending during 2011.

Nevermind the cut in funding that is truly justified by the drastic austerity measures being implemented in the EU's member countries and the EU's perpetual failure to safeguard from waste and fraud the public money it is given.

Nevertheless, has Mr Cameron gambled that protracted disagreement over the level of increase may deliver exactly what he wants?

Institutional stand-off

By securing the backing of ten other EU member countries for the position that the rise must not exceed 2.9%, David Cameron has set up a stand-off between the European Council on the one hand and the European 'Parliament' and Commission on the other.

The procedure for agreeing the EU's annual budget is set out in Article 314 of the EU treaty, as usefully highlighted over on the Your Freedom and Ours blog. Skip to paragraph 5 to find the current state of play.

During the forthcoming potential 21 days of 'conciliation', the likely response from the 'Parliament' and Commission to what has occured over the last two will be to propose a figure somewhere between the 5.9% increase they currently want and the 2.9% backed by a blocking minority on the Council.

If no agreement is reached during conciliation, paragraph 8 confirms that the procedure goes right back to the start, with the Commission required to submit a new draft budget.

Freezing stalemate

That there may be no agreement during conciliation seems a real possibility. The EU 'Parliament' in particular is easily pompous enough about its position and role to believe its duty is to 'take on' national governments. And need we really say more about Commission president Jose 'dimension of empire' Barroso?

By demanding billions extra from cash-strapped European countries that will no doubt have to be additionally borrowed before being handed over, these two EU institutions have at least usefully demonstrated the emptiness of their rhetoric about seeking to help Europe recover economically.

The bigger question during conciliation is whether Mr Cameron's group of supportive countries on the European Council will stand firm.

Should this roundabout of negotiations not be resolved in time for the new budget to start in 2011, Article 315 of the treaty confirms that "not more than one twelfth of the budget appropriations for the preceding financial year may be spent each month ..."

In other words - in the absence of a specific concession by the Council that more than one twelfth per month may be spent, which would be unlikely given they will be attempting to pressure the 'Parliament' and Commission into swift acquiescence to their 2.9% deal - the 2010 EU budget continues into next year.

Bingo! That freeze.

Futile games

So is David Cameron gaming the 'Parliament' and Commission with their own procedures in order to achieve what he wants? Time, and the reaction of those institutions, will tell. Ultimately, it matters little.

For all the reasons and more that were well argued by Harry Phibbs in the Daily Mail, even a freeze isn't nearly strong enough action against the EU's financial incompetence and abject waste and the best case scenario of all this is still most likely to be a 2.9% increase.

That would leave Britain still having to stump up an extra £430 million for the EU next year, on top of the £8.3bn (net) we're already committed to handing over, while making big cuts to essential public services at home.

Justify that, Prime Minister.

Wednesday, 27 October 2010

EU taxation without representation coming your way?

by Marc Glendening

The European Commission last week revealed that it is pressing ahead with its plans to gain more powers of direct taxation over the citizens of EU member states.

On October 19th it announced (pdf) its desire to be able to levy taxes relating to greenhouse emissions, financial transactions, air transportation, energy or company profits.

The EU desperately needs more cash to help sustain new agencies that will exercise its extended range of powers introduced by the Lisbon treaty.

In addition, the crisis being experienced by the Eurozone countries means Brussels needs to build a much larger treasury so that significant transfers of money can be made to countries such as Greece that fall into difficulty.

We opponents of the idea of a single European currency have always warned that monetary union would necessitate fiscal union. As usual, we were accused of hysterical scaremongering and inventing threats that did not exist by the likes of Peter Mandelson, Chris Huhne and Ken Clarke.

This initial drive for new tax-raising powers follows Herman Van Rompuy's speech on the eve of his non-contested appointment in November 2009 as the organisation's new permanent president, when he declared that one of his main objectives was to enable the Brussels elite to by-pass national governments and come directly to us as individuals for cash.

He said that a good way to get the ball rolling, no doubt because of its potentially populist appeal, would be with a 'green fiscal instrument' though in time other types of tax would come into play.

Van Rompuy's speech was music to the ears of EU-centralists such as Andrew Duff, the Liberal Democrat MEP and president of the Union of European Federalists.

In response to the president's speech he said: “He is a federalist and federalists believe in that approach. We have got to have a reform of the financial system. We have also got to grow the size of the EU budget to reflect the growth of competences that are in the Lisbon treaty, such as foreign and security policy, a common energy policy and climate change measures.”

The EU is frustrated by having to go cap in hand to the governments of those nations that are net donors to its budget, who help sustain the whole edifice.

The realisation among the Brussels elite is that it is going to be very difficult politically in the years ahead to persuade the German, British and Dutch governments - the principal contributors to the budget - to keep squeezing their taxpayers.

Everything would be so much easier for the EU if the Commission, which doesn't face public election, could levy its own taxes without fear for the electoral consequences.

The EU is facing an existential moment: It needs to step up a gear and move towards full fiscal union if the euro is to be saved.
The stakes are now very high, both for the EU-centralisers and those of us who seek a Europe of democracies. If the former get the powers and financial resources they seek, the unified, centrally run state they seek will become a reality.

However, achieving these prizes involves the EU elite having to run the massive risk of coming out of the political shadows and making its impirial ambitions more and more apparent to the peoples of Europe.

Until now the very obscurity and tedium-inducing complexity of this parallel system of power has enabled the political classes of the member states to keep transferring new powers to it, away from their own parliamentary systems.

The granting of direct tax-raising powers may prove to be the EU's own Boston Tea Party moment. If the peoples of Europe rally to block such an extraordinary transfer of power and funds it is difficult to envisage how the EU can survive in the long term.

As the old saying goes: 'Be careful for what you wish'.


written by Marc Glendening

Thursday, 21 October 2010

Why isn't the EU budget being cut?

by Marc Glendening

On Wednesday October 13th, 35 MPs defied the coalition government and demanded that Britain's contribution to the EU be cut in real terms at a time when major spending reductions are being planned across the range of public services in Britain.

Ministers said that it would be 'illegal' for our parliament to vote for a cut in the contribution and are instead pressing for a freeze in the amount of money we hand over to a fraud-ridden budget that has not had its books given a clean bill of health by auditors in 15 years.

The European Commission wants its budget to grow by 5.8% next year,
2011-12. Britain is already paying £8.3 billion net, compared to last year's
£6.4 billion above and beyond what we get back currently. In total the gross contribution we have to hand over amounts to £48 million a day.

This year, the Commission has reluctantly settled for a 2.9% rise. The plan is to increase the wages of EU officials by 5.3% and expand the commission's administration costs by an extra 15%.

As Mats Persson of the pressure group Open Europe comments: "People and governments across Europe are fed up with the EU being the only public body protected from spending cuts".

The Council of Ministers wants the Commission to cut its increase for next year back to 2.6%. However, the European Parliament wants to go even further than the Commission and voted on October 20 for a £6.5 billion increase.

For Britain this will mean, if implemented, finding an extra £884 million next year, this being the equivalent of 14,000 doctors, 29,000 nurses, 34,000 police officers or 52,000 soldiers.

The elaborate Brussels 'conciliation procedure' will now kick in to try and arrive at some sort of compromise between the various bodies wanting more money from UK and other European taxpayers.

On top of this, unelected EU tax commissioner Janusz Lewandowski wants to remove Britain's rebate from the EU budget. This is currently worth
£3 billion. It was negotiated by the UK government in the 1980s because British farmers received a much smaller proportion of CAP money compared to their German and French counterparts. Now the Commission wants to reduce our rebate by £2.5 billion next year before phasing it out totally.

Another area of financial attack emanating from Brussels is the way in which we are being forced to contribute to the crisis in the eurozone. The UK was obliged to guarantee £8.6 billion towards the recent bail-out of Greece, about 10% of the total loan package. If the Greeks cannot pay this back, then UK taxpayers will lose their money.

We had to contribute this amount because the Commission utilised article 122 of the Lisbon treaty that allows the Council of Ministers, by qualified majority vote, to impose collective assistance to a member state hit by 'natural disasters or exceptional occurrences beyond its control...'.

This article is therefore, through a highly elastic and convenient interpretation by the EU elite, being used to justify forcing countries outside the eurozone to help prop up those within it that run into trouble. As Commission president, Jose Manuel Barroso, said: "We will defend the euro, whatever it takes".

To cap it all, recently Britain was fined £150 million by the Commission for not flying the EU flag in the vicinity of a number of projects Brussels claims to have 'financed'!

written by Marc Glendening