Parties in European parliament threaten to reject coronavirus budget

The European parliament’s biggest parties have threatened to reject the EU’s coronavirus budget, demanding increased spending on common projects and a stronger rule of law mechanism as their price for backing the deal.

MEPs from the parliament’s centre-right, centre-left, liberals, and greens have backed a resolution saying they “do not accept” the terms of the bloc’s €1.07tn draft budget that was thrashed out after four days of marathon negotiations between EU leaders this week.

The European parliament has a binding say over the EU budget and will enter into negotiations with member states to finalise the terms of the spending plan this summer. MEPs will then have to vote on approving the long-term spending pot, known as the multiannual financial framework (MFF). It is due to come into force from 2021.

The bloc’s budget is intertwined with a pandemic recovery package that will empower Brussels to borrow €750bn on the capital markets and hand it out in the form of loans and grants to stricken economies. Although the parliament has no veto over the recovery package, MEPs have also demanded a role in the governance of a €673bn Recovery and Resilience Facility as their price for approving the final budget deal. 

Speaking in a parliamentary debate on Thursday, Ursula von der Leyen, commission president, urged the parliament to “swallow a bitter pill” and back the €1.07tn in spending that is designed to help repair Europe’s economy after the pandemic over the next seven years.

“We have a chance to do something historic for Europe,” said Ms von der Leyen, who acknowledged that the “lean” budget had cut areas of spending prized by MEPs, including science and research projects. 

Manfred Weber, the German MEP who heads the centre-right European People’s party, said his group was “not yet ready to swallow the bitter pill — especially on the MFF”. 

“It lacks ambition and does not deliver on our priorities,” said Mr Weber, who criticised EU leaders for cutting back on joint healthcare, science, research and border protection spending in the final package.

The parliament is also pushing to strengthen a proposed link between the recovery fund and respect for the rule of law. An agreement between EU leaders over a mechanism has been criticised for being too vague and was hailed by Hungary’s illiberal premier Viktor Orban as a “huge victory”, after he resisted any form of rule of law conditions. 

The agreement among EU leaders left open the precise role for EU governments if the commission finds that a member state has breached fundamental values and proposes that aid disbursements are stopped. 

Dacian Ciolos, leader of the centrist Renew Europe group, said the recovery fund should “contain solid guarantees to make European funds conditional to respect of the rule of law — not just lip service”. 

“We need a new system with clear rules,” said Mr Ciolos “This is not aimed at against Hungary nor against Poland or any other member state but to ensure that European money no longer finances governments which continuously turn their backs on our fundamental values on a daily basis”. 

The final terms of this proposed rule of law mechanism will need to be agreed between member states and MEPs. Negotiations are set to begin in the coming weeks.

The European parliament has never vetoed an EU budget deal after it has been agreed by heads of state and government. But the parliament had demanded a substantially higher budget of €1.4tn throughout the negotiations.

MEPs have also demanded the EU agree on new union-wide levies, such as a tax on tech companies and a carbon border levy, to raise funds to pay back the borrowing. The commission has been asked to come up with plans for both initiatives by early next year.

Speaking after the conclusion of a four-day summit on Tuesday, German chancellor Angela Merkel urged MEPs not to rebuff the agreement. “I hope that our colleagues in the European parliament have seen that we wrestled with each other in order to come up with a good solution,” said Ms Merkel.

@mehreenkhn