Taoiseach Enda Kenny yesterday urged European leaders to reach a compromise on the EU budget ahead of today's summit in Brussels at which EU heads of states will seek to thrash out an agreement on the EU budgetary framework for the next seven years.
While conceding that "tough negotiations" lie ahead, the Taoiseach called for leadership. "I believe that there is a shared appreciation that we need to close the deal this week," he said, on the eve of the summit.
The Taoiseach also appeared to send out a guarded message on the issue of rebates.
Noting that the topic had not been discussed in detail at the last summit, Mr Kenny said agreement "had to be reached on the revenue side" during the budget discussion.
"This involves the very difficult and sensitive question of rebates," he said. His comments echoed those of French president François Hollande on Tuesday, who raised the question of EU rebates in a barely-veiled reference to Britain.
"There are those who want to see cuts," he said, "[ and] others - possibly the same - who want guarantees on their own rebate."
Negotiating tool
Britain's rebate, which was negotiated in the 1980s, is worth about €3.5 billion a year to the British economy. While there is no expectation that it will be cut, it may be used as a negotiating tool in today's discussions. Britain has been one of the most vocal critics of the European Commission's proposal for the seven-year budget, also known as the MFF, calling for further reduction in spending on the Common Agricultural Policy, a reform of structural funds and a cut to the EU's administrative budget.
With European Council head Herman Van Rompuy due to present details of his budget proposal to leaders at 3pm today, last-minute diplomatic efforts were under way yesterday. German chancellor Angela Merkel met Mr Hollande in Paris last night to discuss the budget talks.
Discussions today are likely to focus on how much further the EU budget needs to depart from the €973 billion proposed by Mr Van Rompuy in November when talks on the MFF ended without agreement. Expectations are that some of the research and innovation programmes will take most of the cuts. The initial European Commission proposal was for just over €1 trillion. A multibillion euro youth employment initiative is also expected to be announced by Mr Van Rompuy.
Today's EU summit takes place against a backdrop of renewed uncertainty in the markets regarding the European economy. The euro has weakened in recent days and Spanish and Italian bond yields have risen, amid concern about political destabilisation in Europe.
Destabilised markets
Reports of Spanish prime minister Mariano Rajoy's involvement in a corruption scandal, though denied by the prime minister, has served to destabilise markets, while investors are also unsettled by the potential outcome of Italy's imminent elections.
Addressing the European Parliament in Strasbourg yesterday, European Commission president José Manuel Barroso appeared to underline the political need for agreement on the MFF. Describing the budget agreement as a question of "external credibility" he said that further delays would send out a negative message "at this time of fragile economic recovery".
