EU Commission Budget Plan Likely to Irk Member States

After chastising Germany and France for overstepping the euro zone’s budget guidelines and slapping finance ministers with a court case for ignoring the EU’s deficit rules, it would appear the European Commission wants to increase its own spending over the next several years.

According to several media reports, EU Commission President Romano Prodi will push for a one trillion euro spending program over the next seven years, the maximum level for the EU allowed under current budgetary rules. Increasing the EU budget runs counter to the aims of several member states, in particular Germany, Britain and France, which have all demanded the Commission reign in its spending in the upcoming years.

Prodi, however, has rejected an initiative from the six big net contributors to the EU budget -- Austria, Britain, France, Germany, the Netherlands and Sweden -- to cap spending at 1 percent of total gross national income. The EU chief executive has called such proposals "unrealistic," and says Brussels can only reach its goals and boost EU competitiveness if spending rises.

Increasing competitive advantage

Germany’s Frankfurter Allgemeine Zeitung on Monday quoted sources saying that Prodi and Budget Commissioner Michaele Schreyer were in favor of increasing spending to 1.24 percent of GNI, as opposed to 1.15 percent proposed earlier. In upping the expenditures, the Commission has not only demonstrated its willingness to demand the maximum amount but also its readiness to risk a clash with member states.

According to a document reviewed by the Financial Times, the EU Commission has set its sites on 2010 as the date for catching up with the United States as the world’s most competitive economy. In order to achieve this "increasingly forlorn target," Brussels must increase its research spending by 300 percent and its budget for transportation and infrastructure by 400 percent.

The Commission has also earmarked foreign and security policy as key areas for a budget increase as well as measures aimed at combating illegal immigration and organized crime.

A program of regional aid would also be introduced to bring poorer EU areas up to par, particularly those in the new member states from Eastern Europe which join the bloc in May. This would even out the playing field in what is now being referred to as a "two-speed Europe."

Details of the budget will be adopted at a Feb.10 meeting of the Commission, but the final say rests with the member states, who have already indicated they would put up a fight. Back in December the six big net contributors warned the Commission that the EU’s budget should be subject to the same "painful" considerations as national governments.