2023-12-15 03:06:24
The EU will try once more in early 2024 following Hungary vetoes an agreement to update the Financial Framework and the 50 billion aid package for kyiv
“Night shift summary: veto on extra money for Ukraine, veto on the revision of the Multiannual Financial Framework. We will return to this topic next year. in the European Council following adequate preparation”. With this concise, proud and provocative message the Hungarian Prime Minister has summarized, Viktor Orban, his decision to veto the review of the EU Budget and the €50 billion financial assistance package for Ukraine. The illiberal prime minister relented throughout Thursday on the thorny issue of starting accession negotiations with Ukraine, but He has not given his arm to twist on money. And the other 26 Member States, instead of attempting a very complicated solution without him and outside the usual instruments, have preferred to leave the package on hold and give him some room to convince him in the coming weeks.
Orban was very harsh upon his arrival at the meeting, saying that there was “not a chance” that Ukraine would receive the green light to start accession negotiations. And yet, a few hours later it gave way. The idea came from the German chancellor, Olaf Scholz, who asked him if he would be willing to leave the room and with a kind of abstention allow the decision to go forward without him, without opposition. And Orban accepted. “It was a brilliant idea, completely by surprise, but it worked very well,” he explained when the Dutchman finished, at 3 in the morning. Mark Rutte.“Without him in the room it took us just two minutes.”
But the price of that transfer, which it tried to sell to its citizens as if it were the opposite, was very high. After 17 straight hours in the room, the continental leaders assumed that what was not going to be possible was an agreement on the Financial Framework and assistance. The rest, the 26, were all in agreement on the very complex package, something that has led to many weeks of fights at the level of ambassadors and ministries. But Orban did not move. “We have 26 leaders who agree. Sweden has to consult with its Parliament, because it is its normal procedure, but there is one country that cannot. So we will try once more at the beginning of next year,” said the President of the Council European, Charles Michel.
The decision is a stick. One of lime and another of sand for Ukraine, that he needed the symbolism of the beginning of the negotiations, something that he has said Volodymyr Zelensky “It is a victory that motivates, inspires and strengthens.” But what he desperately needs the money, up to 17,000 million euros in transfers and 33,000 million more in advantageous loans for the coming years.
There are technical possibilities to circumvent the Hungarian veto, unlike accession, which requires irreplaceable unanimity, or at least no votes once morest, and which can still be paralyzed later. Other instruments can be used, go to 26, but it is downright complicated, more bureaucratic, with legal problems to solve and with a message of division that everyone prefers to avoid. “Without Hungary, a decision at 26 has many ramifications, we must debate how to use the institutions, do many papers, intergovernmental agreements. And we also want it to be at 27 because it is a balanced package. There is hope, I am cautiously optimistic regarding achieving what is missing at the beginning of next year,” Rutte said. There is no scheduled date for the attempt, which would be in an extraordinary European Council, but everything points to the end of January or beginning of February.
There is some urgency, because the mechanism currently providing financial assistance to kyiv, coordinated by the European Commission, has only one payment pending, and there are fears that the flow of money might be interrupted. “I don’t want to go into details because we have to work in the coming weeks for the next extraordinary Summit, but I want to send a message of calm: we have tools for Ukraine, which has our support. There is a political commitment, reflected in the conclusions”said Charles Michel at the end, puffing out his chest for having achieved two very complicated advances, although the economic one has a blockage that has nothing to do with technical reasons, but rather political campaigns and completely individual political interests.
The heads of State and Government will continue this Friday to close the pending issues of migration, the strategic agenda and Defense. And above all a very complicated debate regarding the Middle East, since The positions might not be more divergent. Spain, Malta, Ireland and Belgium sent a letter a few days ago urging that a ceasefire request be included and that the bombing be stopped immediately, among other things, but for a good number of delegations this is going too far. So we do not expect very different language from the last Summit, where everything was very diluted.
THE KEYS OF THE BUDGET REVIEW
Budgetary issues are always the longest to process in the Union. The Budget, in fact, lasts seven years precisely for this reason, because it takes so many months to polish it that it is impossible for there to be one per Fiscal Year. The rules say that a review must be done halfway through that seven-year period, and this year’s review is completely anomalous. As was negotiated before the pandemic, the war in Ukraine or the energy crisis or the ECB’s repeated rate hikes, the European Commission asked the capitals up to 66 billion additional euros, a “madness”, according to the most orthodox delegations.
The team of Ursula Von der Leyen It reached that figure taking into account the objective of dedicating an aid package of 50,000 million euros for assistance to Ukraine (33,000 in loans and up to 17,000 in transfers that will not be returned). In addition, they said, 15 billion are needed to support the Mediterranean countries following the increase in arrivals of asylum seekers and at least 10 billion more to not be left behind on the global board through a strategic technology platform that should draw on Cohesion and other funds dedicated to innovation. Not to mention the cost of debt.
Interest rates on 10-year EU bonds have risen from the 0.09% offered in the first issue of NextGenerationEU in June 2021 to 1.53% in May 2022 and more than 3% in 2023. And that added cost, not contemplated when the program was designed, must be covered in some way. For this, the Commission estimated that it will need around 19,000 million more euros, which is added to 900 million more in administrative costs due to inflation and regarding 3,000 for the so-called flexibility instrument.
The governments said no way. There might be contributions, but the bulk should come from adjustments, cuts and reusing superfluous items or prioritizing some over others. The Spanish presidency has led the negotiation and was reducing that figure of 66,000 million of fresh money to less than half. And in the latest proposals, known in community slang as NegoBox, negotiation boxes, it was lowered to 22,500 and 21,000 million respectively. Still was too much for Germany, the Netherlands and the Nordics, but already at levels where consensus was possible.
In addition, NegoBoxes do all types of accounting engineering. They start by reducing the debt bill and even contemplating Let kyiv assume part of the interest costs, which would allow less spending in the capitals. Likewise, for example, it is contemplated that if in the end the EU manages to obtain performance of frozen assets to Russia, That amount is also deducted from those 17,000 million in transfers that will not be returned.
All the major items, except the Ukrainian one, suffer notable cuts, because if under normal conditions this would be expected, there has also been a setback from the German Constitutional Court, which has declared illegal the use of tens of billions that the Government of Olaf Scholz, and which has caused not only an almost impossible agreement for the 2024 Budget, but also cuts in European aspirations.
The European migration item, for example, was revised in the latest NegoBox from more than 12,000 million to initial 9,500. The Strategic Technologies Platform (Step) suffers a huge drop, from 10,000 to 1,500 million euros. And the more than 17,000 million contemplated for debt interest are eliminated in exchange for a cascade mechanism, designed by the Spanish presidency and polished in recent days, which means starting with the initially budgeted items, and if that were not enoughstretching the budget margins, the flexibility instrument, the single margin and other items. And if that were not enough, from unspent commitments from the previous year, and only ultimately, and with safeguards, from fresh additional money.
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