Budget disputes top European Council agenda amid energy price pressures

Asema Ridan (report) Brussels, Oct 15 (KUNA) -- The long-term budget file of the European Union for the period 2028–2034 tops the agenda of the European Summit launching today, Thursday, in Brussels, amid divergent positions among member states on the budget size, spending priorities, and funding sources, alongside growing pressures from rising energy prices and increasing defense needs.

The anticipated budget dominates the agenda of the European Summit taking place in Brussels today and tomorrow, with efforts underway to reach an agreement before year-end to avoid complicating negotiations due to upcoming electoral milestones in several member states, notably France, where the prospect of a far-right surge has raised concerns about the future of European funding.

Disagreements center on the Irish presidency’s proposal for the Council of the EU, which calls for reducing the proposed budget by 141 billion euros to reach approximately 1.622 trillion euros in 2025 reference prices for the seven-year period. Germany and several net-contributing countries argue that the proposed cuts remain insufficient and that the budget size should align with the financial capacities of the countries bearing the largest share of its funding.

German Chancellor Friedrich Merz stated in a declaration that the new proposal does not constitute a basis for reaching an agreement, emphasizing the need for the European Union budget to be affordable for the countries shouldering the heaviest funding burden. Merz added that making necessary adjustments, rationalizing spending, and updating priorities is a shared responsibility among member states.

Berlin and its allies also object to the distribution of the proposed cuts, arguing that they disproportionately affect strategic areas such as defense, scientific research, and new technologies, at a time when the EU is seeking to enhance its competitive and security capabilities in the face of the United States and China.

In contrast, France opposes broad budget cuts and calls for additional financial resources to address growing economic and security challenges. Other countries, including Italy and Spain, demand the preservation of funding for agriculture and regional development, as well as the reduction of economic and social disparities among member states.

Paris is calling for the creation of new European financial resources, including taxes on large corporations, digital activities, crypto-assets, and online gambling, alongside environmental taxes and tobacco levies, as essential tools for financing shared priorities.

Upcoming elections in France and several other member states have raised concerns that their outcomes could affect the trajectory of negotiations on the European budget and delay the conclusion of an agreement.

In this context, French far-right leader and presidential candidate Marine Le Pen renewed her rejection of approving the European budget before the next elections, calling it a “democratic scandal” and urging a reduction in France’s contribution to EU funding.

Beyond financial disagreements, the European Summit faces mounting pressure due to rising energy prices. Expected responses to the fallout from these price hikes are likely to dominate discussions, at the expense of progress in budget negotiations. European gas prices have risen by approximately 140 percent, while diesel prices have doubled since the outbreak of the US-Israeli war on Iran in February last year.

Member states differ on the causes of rising prices and the ways to address them. Some capitals blame energy transition policies and the emissions trading system, while other countries argue that these policies are essential to reduce reliance on fossil fuels and avoid future crises. European Council President António Costa is set to lead negotiations aimed at bridging differences among member states, as discussions continue on holding an extraordinary summit in late November to pave the way for a potential agreement at the European Council scheduled for December 17–18. The multiannual financial framework is one of the European Union’s key instruments for funding its policies in agriculture, research and technology, defense, energy, regional development, support for Ukraine, as well as enhancing its global economic competitiveness. Its adoption requires unanimous approval by member states, making any compromise contingent on European leaders’ ability to balance the demands of net contributor countries with those of beneficiary countries, alongside the bloc’s growing needs amid current economic and geopolitical pressures. (End) ANP / TAP