A budget deal that the EU will come to regret

Herman Van Rompuy, the president of the European Council, is to be applauded for his efforts, but sadly this is not the long-term budget that was needed.

It could have been worse. The deal agreed between members of the European Council on the European Union’s budget for 2014-20 is at least a deal. If last week’s summit had broken up in acrimonious dispute then the damage would have been much worse.

So Herman Van Rompuy, the president of the European Council, is to be applauded for his efforts. Hindsight judges him correct to have called a halt to the first summit negotiations in November, and to have resumed the talks this month. In budget negotiations, as in so much else, ripeness is all.

Moreover, the conduct of the negotiations appears to have been firm but fair. The going was tough, but no one was humiliated. Some emerged with more of what they wanted than others, but dignity was preserved, which has not always been the case.

Yet a sense of relief should not blind anyone to the imperfections of the deal that was done. This is not the long-term budget that was needed. An opportunity has been missed, which the EU will come to regret – repeatedly.

The claims made for this budget – that it is forward-looking, that it is a budget for growth and jobs, that it is modern – are tendentious, not to say incredible. This is a budget full of contradictions, some of which were eminently predictable. But just because we can see something coming down the tracks does not mean it must be welcomed when it arrives.

Most glaringly, this budget sets back the cause of reforming European agricultural policy. In recent years there has been some intelligent thinking about how to make support for farmers more sensitive to the markets and more respectful of the environment. Some progress has been made. More was promised – through reform of the Common Agricultural Policy’s payments. But the European Council has undermined those reform efforts. The farming lobbies – stronger in some countries than others – have prevailed. They were fighting to conserve what they already have rather than to shape agriculture to Europe’s future needs. Those in the agricultural business who have been working from the inside for reform have been betrayed.

This is a cause for regret not just because the CAP is a distortion of the EU’s spending and will continue to be so. It is also a stumbling-block in the way of decent trading relations with the rest of the world. The summit’s fine words on the Arab Spring were mocked by the conservatism on CAP reform.

The way in which the sums earmarked for infrastructure development – the Connecting Europe Facility (CEF) – were reduced during the budget negotiations is indicative of the national leaders’ lack of faith in the EU. They do not want to surrender control over spending decisions to the European Commission and they doubt their own ability to find the projects and funds to qualify for the CEF money. So they cut it back in favour of their familiar (individual) milch-cows: the structural funds.

The end result is a budget whose structure is very familiar from previous seven-year periods. The world is changing, but the EU’s budget adapts only slowly.

It could have been worse, but it should have been so much better.