Talks at ‘informal’ Ecofin expected to be acrimonious

Economy and Finance Minister Giorgos Alogoskoufis goes to Dublin today to attend an informal European Council of Finance Ministers (Ecofin). Although informal, the Ecofin is expected to discuss burning issues, including the direction of EU finances for the period 2007-2013 and the Fourth Community Support Framework (CSFIV) program that channels aid to the EU’s poorest regions. The current mood in the EU is not very upbeat. Economic recovery, often trumpeted but too slow in arriving, is still too weak. Unemployment is persistent and the EU is only too aware that it is falling further behind the United States, despite the grand declarations – notably in Lisbon, three years ago – about Europe catching up and becoming a leader in innovation and economic development. The expansion of the EU from 15 to 25 members at a time of economic stagnation further complicates the issue and makes allocation of resources an even more controversial subject. The larger states – France, Germany and the UK – want to limit spending over the next few years. They are joined by countries such as the Netherlands, Sweden, Finland and Austria, whose main complaint is wasteful spending. The group, however, is far from coherent: France, for example, would rather undermine the whole European project than accept significant cuts in agricultural subsidies that the others demand. The countries of the south fear that the new countries, seven of whom are significantly poorer than the poorest of current members, will get the lion’s share of CSFIV aid, and that little will be left for them. Thus, Greece, Portugal and Spain, and in some cases Italy, are bracing for a tough fight over fund allocations. EU Budget Commissioner Michaele Schreyer is expected to propose future budget outlays and how they will evolve in the 2007-2013 period. The Commission’s proposal that the EU budget rise to 1.24 percent of the Union’s gross domestic product (GDP) is totally at odds with the wishes of the budget-trimmers, who want spending reduced from about 1.10 percent of the GDP currently to 1 percent. All major decisions will be deferred to the European Council, but the debate in Ecofin will provide a first taste of very difficult negotiations to come. Also in the Ecofin, Finance Commissioner Pedro Solbes will present the main points of the Commission’s spring report and European Central Bank leader Jean-Claude Trichet will try to defuse pressure for a cut in interest rates.

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