Richard North, 27/06/2013  

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The long-running saga of the EU's multi-annual budget seems unexpectedly to be coming to a close, the European Parliament, which had threatened to block any deal, having been described as backing down.

Nothing is for nothing in EU politics, though, and there has been some serious horse-trading. By no stretch of the imagination can the Parliament be considered as having conceded its position. According to Handeslblatt, the agreement has been made possible because member state governments have made concessions, particularly on the all-important question of flexibility.

They have agreed that unspent money in any one financial year does not have to be paid back to the member states, as has been the case previously. Instead, it may be carried over into the following year – subject to certain limits – provided the spending is kept within the defined budgetary categories.

This is not quite what the Parliament wanted, but it is good enough – and almost exactly wipes out the multi-annual cut. In the last period, a total of €55 billion was repaid to member states. Under the newly-agreed regime, such monies will be retained by the EU.

The member states have also agreed to a binding review process for re-assessing the budget after 2016, with the possibility of amendment budget being drawn up. Increases have not thus been ruled out. Simply, the can has been kicked down the road to beyond the next election, so that Mr Cameron can claim his victory.

The position on the amendment budget for 2013 remains substantially unchanged for the current year. After the initial payment of €7.3 billion, the outstanding sum of €3.9 billion is still to be decided.

However, the way is now cleared on the multi-annual budget for payments of €908 billion over the next seven years, and for the EU to make commitments for future payments at €960 billion. Additional amounts outside the formal budget increase the EU's disposable managed funding to €997 billion, only just short of €1 trillion for the financial period ending at the close of 2020.

Given the superficiality for which the British legacy media is justly famous, though, none of the British reportage gets anywhere near giving an accurate picture of the outcome, with even the BBC missing the main points.

Relying on Pawel Swidlicki, from Open Europe, however, the Daily Mail homes in on a small cutback in the Court of Auditor's budget, implying that funds have been reduced because "the watchdog has been a thorn in the side of Brussels" and "has published series of critical reports on wasteful spending".

What is actually happening, though, is that there has been "large scale decentralisation" of the management of the EU budget, with national authorities being required to do much more of the front-line number-crunching and spadework.

By this means, costs are being dumped on the member states, concealing an actual increase in the overall auditing budget. This is happening across the board, for instance with policy development being slipped into the Framework 7 research programme. This is co-financed by Member States, thus providing an additional subsidy to the Commission.

The Court of Auditors has also handed some of its functions to the European Parliament (which is getting an increase) and, according to its own strategic plan, is stepping back to take a more of a management and advisory role.

Increasingly, some of the functions are also being dealt-with by larger regional and global organisations, the European Organisation of Supreme Audit Institutions (EUROSAI) and the International Organisation of Supreme Audit Institutions being the premier institutions.

EUROSAI, in fact, was established in 1990 with 30 members (the SAIs of 29 European States and the European Court of Auditors). Now its membership stands at 50, including the Court of Auditors. Alongside the European Confederation of Institutes of Internal Auditing, this gives the EU powerful additional tools with which to monitor member state financial performance, without the costs showing up in the EU budget.

Thus, although the EU budget may now be resolved (almost), this is funding only the visible part of its activity, and by no means the whole of that. You would struggle to find the budgets for EUROSAI, and associated organisations, such as WGEA, but it is quite obvious that they confer added value to the EU budget.

As always with the EU, therefore, nothing is ever quite what it seems.


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