Doubts remain in Brussels over Cyprus’ EU budget plans despite provisional agreement

While European Commission President Ursula von der Leyen and Cypriot European Affairs Deputy Minister Marilena Raouna both hailed the reaching of a “provisional agreement” regarding the fundamentals of the European Union’s next multiannual financial framework, the Cypriot government continued to face criticism from across the continent regarding its plans. The multiannual financial framework is the EU’s budget for the period covering the years between 2028 and 2034. Von der Leyen announced “excellent news” from the Council of the EU late on Sunday night, saying that “a provisional agreement has been found for the Council position on key building blocks for the EU budget”. She added that she had congratulated Cypriot President Nikos Christodoulides “for his leadership” and for the Cypriot government’s hard work in submitting its own proposal for the framework – known as a “negotiating box”, or a “nego box”, in its capacity as the holder of the council’s rotating presidency. “There is still work to do, but the direction is clear. Member states support the commission’s ambition for a simpler and modern EU budget – one that invests in Europe’s priorities such as competitiveness, security, agriculture, cohesion and its global role,” she said. Shortly afterwards, Raouna, too, hailed the provisional agreement as a “significant milestone”, and said that it provides a “strong basis for the work ahead”. However, criticism of the plan continued to roll in over the weekend, including from the Socialists and Democrats group in the European Parliament – a group of which Cypriot government-supporting Diko, and its MEP Costas Mavrides, is a part. The group said it was “extremely concerned” by the Cypriot government’s proposal and said it was “particularly worried” by the fact that Cyprus’ proposed budget is €32 billion smaller than that proposed by the commission last year. It also criticised “the lack of commitment to establishing separate and well-funded allocations” to policy areas such as cohesion and agriculture, warning that this could have “dramatic consequences for the future of these key EU policies”, and that there was “no clear funding for pressing issues affecting EU citizens, such as affordable housing or the increasing cost of living”. Additionally, it said that the Cypriot government had exhibited “no demonstration of a will to end the stalemate in the council where member states are so far reluctant to meaningfully discuss the establishment of a system of genuine new own resources as revenue of the EU budget”. Meanwhile, Carla Tavares, one of the European Parliament’s negotiators on the next multiannual financial framework, said of Cyprus’ proposal and the provisional agreement on it that “member states are ready to follow in the wrong direction”. “Time and time again we repeat it – we cannot to more with less!” she added, before hinting that hopes in Brussels that an agreement may be reached by the end of this year may be unrealistic, saying, “we stand ready to engage in fruitful negotiations with the council and the commission to have a budget in place as of January 1, 2028”. Elsewhere, Italian Prime Minister Giorgia Meloni called for the EU’s rebate system, in which the five net contributors to the EU’s budget receive reductions in their contributions, to be abolished in the next multiannual financial framework, or for Italy to be granted a rebate of its own. At present, Austria, Denmark, Germany, the Netherlands and Sweden receive rebates, with Germany the largest rebate recipient, at over €3.6bn per year, and the Netherlands and Sweden both also taking over a billion euros per year in rebates. “The so-called rebates must be abolished. If this anachronistic system is maintained, we will ask that Italy, as the EU’s third-largest net contributor, enjoy the same privilege,” she told her country’s parliament. Last Friday, Dutch Finance Minister Eelco Heinen had described the Cypriot government’s proposal as a “no-go box” and said the Cypriot government’s plans were “unaffordable” and “unbalanced”, while also setting the “wrong priorities”. This was because the Netherlands, and other large economies in the continent’s north and west, wished to press for deeper cuts to the cohesion and agriculture budgets, and offer more funds to matters such as defence and competitiveness. Along the same lines, news website Politico quoted a spokesperson for Germany’s government as having said that “the negotiating framework is unaffordable, and it is also unbalanced”. “We will not agree to either an unaffordable or an unreformed multiannual financial framework,” the official added, saying, “I don’t think I need to go into detail to explain that this cannot serve as a basis for an agreement at all”. News website Table Briefings also quoted another diplomat from another member state which is a net contributor to the EU’s budget as having aid that Cyprus’ proposals are “very far from any landing zone”. At present, it is believed that while a majority of member states may be sympathetic to Cyprus’ proposal, those against it, such as the Netherlands, account for almost two thirds of the EU’s economic power and, crucially, budget contributions. Ireland will succeed Cyprus as the holder of the Council of the EU’s rotating presidency at the end of this month and is expected to present a second “nego box” in October. Despite expected internal wranglings over the coming months, it is still hoped that an agreement on the budget may be reached by the end of this year.