“Brussels Bulletin”
Welcome back. Item 3 is our “Brussels Bulletin”, which has been very ably put together by Dr Ian Duncan. We will take comments from members after Ian’s presentation.
Ian Duncan (Clerk and European Officer)
I want to touch on three broad areas this morning. You will notice that all the substantive points in the bulletin this time are about economics, finance and the eurozone situation. As Dr Zuleeg said just a few moments ago, you have to read the papers almost every day to keep abreast of these things, but there are a couple of things to note.
The Greek Parliament has now passed its austerity budget. I draw your attention to the bullet points in the note, which let you see what the people of Greece are up against. That budget includes quite a severe suite of conditions: a change to the retirement age; pension cuts; salary cuts across the board; cuts in the minimum wage; holiday benefit cuts; severance pay cuts—and it goes on. Despite that having been passed, eurozone ministers have not yet been able to unlock the next tranche of money. That should happen at next week’s European Council meeting, but it has not happened yet. That is a reminder of what is being asked of and expected from the people of Greece right now.
On the multi-annual financial framework, it is quite telling that last Friday’s discussions on the annual budget for next year broke down in acrimony. In that discussion on 12 months’ worth of funding, the Parliament and the Council were unable to reach agreement over a €9 billion shortfall. That is how much is missing between the commitments that the EU has made and what the budget would actually pay for. The talks collapsed over €9 billion. If that continues, the budget will be rolled over month by month—I know that Clare Adamson and I talked about that after a previous meeting—but that is another reminder of what the member states and the European Parliament are up against in the discussions on the multi-annual financial framework, where considerably more than €9 billion will be at issue. That is something to note.
The bulletin includes some comments on where things are on that budget. The Cypriots’ ambition is to bring some sort of conclusion to the early stage over the figures, but they have not been successful in that thus far. They are looking for a rise in the budget of around 4.8 per cent, but you will know from reading the papers and following the news that many others would like that to be higher.
The European Parliament, which has a much stronger role in the budget this time around, is very unwilling to sacrifice anything. In many ways, the elected members inside the European Parliament are stating very clearly, “You in the Council have made these commitments and you have said that this is what you wish to do. You cannot make these commitments unless you are going to fund them. Otherwise, it seems a bit silly.” The members of the European Parliament are being the custodians of propriety, if you like, whereas the member states, as you will see from other comments in the bulletin, are seeking to cut and trim wherever they can.
For example, I know that our predecessor convener, Irene Oldfather, was very much excited by the globalisation adjustment fund, but some of the contributing member states now wish to eliminate that entirely. At the time, that fund was seen as one of the most important measures to support countries going through job losses as a result of globalisation, but member states are seriously considering eliminating it—not just trimming or cutting it but getting rid of it. Again, that should be a reminder of what the budget talks will be about. They will no longer be about cutting little bits around the edges; they will be about big, hard issues, which will have to be examined.
Finally, on the gender equality issue that we touched on last week, one interesting development is that the Spanish have blocked the appointment of a member of the European Central Bank’s board because he is a man. They have said that there should be gender equality on this issue, supporting the Parliament’s view, which has already been expressed. It remains to be seen whether that will stand because member states acting in Council can push it through. However, it is a reminder that, on certain matters, interesting things can still happen.
Do members have any comments on the “Brussels Bulletin”?
10:15
I was especially interested in the section about the Commission’s tourism initiative at the end of the bulletin and its reference to
“consultations and communication activities with the travel trade and consumers”.
Will Scotland be consulted on that and have a chance to comment?
I certainly would have thought so. There is a recognition that Europe can sell itself as a tourist destination—after all, it has a lot to sell—and the Commission is trying to encourage member states and regions to contribute to this activity in order to establish what exactly it is trying to sell and how best to sell it. Scotland will absolutely have the chance to contribute to that work.
Following on from Helen Eadie’s question, I note that, with the Schengen agreement, the promotion of countries will have visa implications; indeed, it means increased costs for the UK. How will that issue be handled if the whole of Europe is going to be promoted?
I am almost tempted to say that no one has thought of that. I do not mean that badly, but the fact is that the people who put forward ideas on tourism are not the same people who deal with the Schengen agreement. That sounds like a terrible answer, but the real answer might well be as simple as that. Clearly, there are visa implications and I do not doubt that they and other issues around passports will have to be addressed if an EU-wide offering is to be provided. You are certainly right to highlight the issue.
Coming back to Greece, I think that we really have to be sympathetic to the plight of the ordinary Greek people and the measures that they are having to face. After all, none of this is their fault or of their doing. I think that a fair summary of what Dr Zuleeg said just a moment ago is that there has to be a dual approach; on the one hand, national debt has to be reduced but, on the other, these countries must be allowed to make some investment so that they can recover. On the face of it, the measures that are being imposed in Greece seem to be putting the country in even more difficulty and making it more difficult for it to recover. Is there any flip-side to what is happening in Greece that is allowing the Greeks to do what Dr Zuleeg suggested is needed in these countries and giving them an opportunity to recover and make investment, particularly capital investment? Is that happening in Greece or is it all just a matter of cuts?
The only thing that has happened is a broad agreement to postpone the dates of the fiscal targets by two years, which, if you like, gives Greece longer to meet them. However, it is a bit like being told that you are going to lose a leg and then discovering that you are only going to lose it from the knee down. I am not sure that the offer is so great, but it provides a small respite from the payment situation.
The issue that is coming to the fore is forgiveness. At what point will the debts be forgiven? Indeed, what would such forgiveness look like? Without forgiveness, there will be nothing but austerity, and it is not all that obvious where the funding for anything else will come from. Although the EU will attempt to use various funds in the next financial round for investing in Greece, many of those funds can be unlocked only with matching funds and conditions will have to be adjusted to allow Greece to get, for example, structural and cohesion funds, a lot of which are about co-financing. The question is how you co-finance if you do not have any money. The EU can do more to address some of these issues if the appetite exists but, at the moment, everything is focused on getting Greece to sign up to its commitments and there is very little appetite to give it a great deal of slack in that respect.
I want to ask about something that is not in this particular bulletin but which we might want to flag up in a future bulletin. What effect will the budget have on the Erasmus student exchange programme?
You are right to raise the issue. The €9 billion that is being asked for is primarily made up of funding for the Erasmus programme. Without that money, it cannot go ahead in its present form. Indeed, given its nature, it is hard to see how it can go forward in any form. You cannot take a little bit of Erasmus and still expect it to work; it must be supported with funds.
A future bulletin could indeed report on the issue and its implications. Were the issue to roll forward on a month-by-month basis, the programme would continue to receive the moneys as it does at the moment, but that is not exactly the best way of taking forward something that supports exchange. It might be best for me to report in the future with more information.
Poor Dr Duncan is having to get used to our asking questions about things that are not in the bulletin. My own question follows on from the issue that I raised last month about regional selective assistance. Has there been any update on that matter?
I am visiting Brussels next week and have set up a couple of meetings to inquire into the matter. I will report back at the committee’s 29 November meeting on what I have found out.
I have a couple of other questions. First, what are your thoughts on the suggestion that the impact on the Erasmus programme might also be felt on horizon 2020?
Secondly, with regard to last week’s vote on the EU budget at Westminster, the UK Government’s proposal was to freeze the overall budget but reduce the common agricultural policy budget. For a future meeting, could you have a look at the impact of such a move on Scotland’s farmers, because I think that it will have a greater impact on them than it will in the UK more widely?
It might be best for me to put together a paper covering all aspects of the multi-annual financial framework. At the moment, the UK is seeking a reduction in the CAP budget, but other countries are seeking reductions in other major sources of funding. For example, as we have already discussed, the French are looking for a significant reduction in cohesion funding. Every country seems to be trying to reduce the pots of money that it does not get much from, but you are quite right to highlight the fact that Scotland qualifies under a number of other areas within the overarching CAP, particularly less favoured area status, which brings a significant amount of money to Scotland and Wales but less to England. Instead of giving you some piecemeal answer, however, I will put together a short paper to outline different countries’ key negotiating positions.
Of course, those positions will soon become very clear. A wee note in the “Brussels Bulletin” refers to what are called “confessionals”, which is a slightly unusual term for the President of the Council asking heads of member states about their red lines in the forthcoming negotiations. When we get that information, we will know very clearly exactly who wants to protect what and at what level. There will be no doubt about that.
As for horizon 2020, we are still in the last tranche of the predecessor—the seventh framework programme or FP7. There will be implications for that, because there is still some money left to be spent. It remains to be seen how exactly the issue will be resolved, given that the Parliament is unwilling to negotiate at all around the matter. It wants the money to be paid and sees the £9 billion as the minimum that it will accept in this particular round. It is difficult to see how a compromise will emerge in the short term, particularly with the MAFF talks due to begin. Things will be much clearer by the end of the year.
I think that our colleagues on the Rural Affairs, Climate Change and Environment Committee will welcome being kept up to date with CAP developments and I am sure that we will be happy to share with that committee anything that the clerk produces for us.
If members have no more questions, we will move on.