Finland charts the middle ground between EU budget givers and takers

This week sees the Goldilocks of EU budget negotiations - some countries want the budget too high, some want the budget too low, but Finland wants to find the perfect budget compromise.

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File picture showing Europe Minister Tytti Tuppurainen (centre) talking with EU colleagues at General Affairs Council Roundtable, Brussels, 28th January 2020 / Credit: European Council Newsroom

Senior members of the Finnish Government have got Brussels – and Berlin – on the brain this week, as months of planning and negotiating on setting the European Union’s budget for the next seven years reach a climax.

A slew of minister have already been shuttling back and forth to EU meetings over recent days including Finance Minister Katri Kulmuni (Centre) and Foreign Minister Pekka Haavisto (SDP).

But it’s Europe Minister Tytti Tuppurainen (SDP) who has carried the main burden of preparing the way for national leaders to try and reach agreement on the budget, known as the multi-annual financial framework, a task she began during Finland’s six month Presidency of the European Council in the second half of 2019.

Oulu MP Tuppurainen told reporters in Brussels on Monday that she welcomed the progress made so far in budget negotiations and was ready for the European Council meeting on Thursday. Before then, Prime Minister Sanna Marin (SDP) will meet with German Chancellor Angela Merkel in Berlin to lay out Finland’s pitch.

Detail of blue balloons with EU logo / Credit: News Now Finland

So what’s the deal with the budget?

The main complicating factor in negotiation the EU’s budget from 2020 to 2027 is the fact that Britain, after Brexit, will no longer be a contributor. That means a loss of around €75 billion to plug.

Every EU country will have to pay more to make up this shortfall and broadly speaking EU countries are divided in two main camps for budget talks: those countries that give more to the EU’s coffers than they receive; and those countries who receive more than they give.

The first group of countries, known as the Frugal Group, consists of members like Sweden and Denmark, Netherlands and Austria. They want to see the EU’s budget set at no more than 1% of the region’s gross national income.

The second group, known as the Friends of Cohesion, consists of countries like Estonia, Latvia, Lithuania, Poland, Hungary, Czech Republic, Romania, Portugal and half a dozen others. They say proposed cuts to the funding they receive are too deep, and want richer countries to pay more.

The President of the European Council, Charles Michel, put forward a proposal last week that is somewhere in the middle, and not too far away from what Finland suggested at the end of 2019.

Finland thinks there’s still room for negotiations here, and they’re charting a course between the Frugals and the Cohesives.

“As a constructive state we are not as frugal as the so-called ‘Frugal Four’ but we still belong to the family of net payers, so the overall size of the budget is very important to us, and the number put forward by Charles Michel is too high” says Tytti Tuppurainen.

“He proposes 1.1% and our national position is a 1.06% increase. Our aim in the negotiations is to keep the overall levels down, so there are some savings to be made” she tells News Now Finland.

So from a Finnish perspective the Commission’s budget proposal is too high, and the biggest countries are want a budget that’s too low, while also insisting on keeping the rebates they’ve negotiated over the years.

Tuppurainen says that now with the UK out of the EU, the slate for rebates (or budget corrections) which Finland anyway doesn’t receive, should be wiped clean.

File picture showing exterior of European Commission building in Brussels / Credit: iStock

Why is the budget necessary?

The common budget is needed to fund a whole range of initiatives that individual nation states cannot deliver by themselves like agricultural subsides, science programmes, funding for rural regions, money to fight the climate crisis and much more.

Finland, and other richer nations, say if the Cohesive countries want to keep getting funds they’ve got to agree to play by stricter rules on a range of topics including climate action and the rule of law, which irks countries like Poland and Hungary in particular.

“We cannot allow the situation to take place where some countries are violating our values, while benefiting from our budget” explains Tuppurainen.

“And we have to make sure that all the countries receiving money from the transition fund are committed to the 2050 climate neutrality target” she states.

The Finns are also keen to make sure there’s not too many cuts to the EU’s Common Agricultural Policy which benefits Finnish farmers – and while Tuppurainen insists that farmers “need adequate funding” to fight climate change this is more likely a sop within Finland’s coalition government to the Centre Party, whose base has traditionally been the countryside.

File picture of Finnish Parliament / Credit: News Now Finland

What comes next for the budget negotiations?

Presuming that four or five days of talks from Thursday are fruitful at EU level, the budget framework still has to be approved by the European Parliament and by 27 national parliaments.

At Eduskunta in Helsinki the main opposition comes from the Finns Party.

“I can expect that the Finns Party is going to be critical, however good outcome we are going to negotiate” says Tytti Tuppurainen.

“On one hand they’re saying the budget is too high, on the other hand they want more money for the regions.”