António Costa, president of the European Council, has a clear objective: to conclude negotiations on the next multiannual financial framework, the European Union budget that extends over several cycles, before the year ends. Although the talks have advanced very little, community and diplomatic sources explained during the summit of heads of state and government held in Nicosia (Cyprus) on Friday, April 24, that this remains, to date, the objective of Costa, of the Cypriot presidency, which ends in July, and of the Irish presidency, which will succeed it.
The Cyprus summit was an “important milestone,” in Costa’s words, because the Portuguese was determined to compel the heads of state and government to sit down to discuss the next MFF, which will run from 2028 to 2034. But the gathering was a reminder of why leaders are so reluctant to tackle the issue: each one dug a little deeper the trench in which their delegation is kept.
“There are things, sacrifices, gambits, concessions and feints that can only come from one person: the head of state or government”
Leaders have postponed this discussion and the particular “moment of truth” of the negotiations for some time. The last time was during the formal European Council summit in March. Meanwhile, at the technical level, capitals have indeed addressed the matter, worked on it, and made progress: few, but some. However, in the European Union, the technical levels have their limits. There are things, sacrifices, gambits, concessions and feints that can only come from one person: the head of state or government. That limit—the one that there are certain moves that only the figure with the greatest political legitimacy in a country can make, the one who is directly responsible to the citizens— almost always ends up at the negotiating table.
And somehow, Costa wanted the leaders to start stepping out of their trenches, to be forced to move from the sparring phase to open-field fire exchanges. Because that is how a paralyzed negotiation at the technical level is unblocked. With the moves, right or wrong, by the leaders, the officials and diplomats can keep advancing. If the leaders do not take risks, all that happens is digging the trench deeper.
Germany, the Netherlands and the battle over the size of the European budget
In Cyprus, that is what happened. The Netherlands and Germany clearly marked their negotiating position, calling for cuts to the Common Agricultural Policy (CAP) and completely rejecting any attempt to increase the size of the next MFF to address the EU’s new priorities, such as defense or competitiveness. “Europe must manage with the money we have,” explained Friedrich Merz, the German chancellor. The stance of The Hague or Berlin is not that those new priorities should not be funded. It is precisely these capitals that most want to allocate money to these new objectives, but taking it from somewhere else that is not their own pocket—that is, obtaining it from other items. It is not new: Germans and Dutch have long talked about the “modernization” of the MFF as a synonym for cutting a line of funds that they consider elephantine and outdated, such as the CAP. They have been talking about this long before defense and competitiveness became the two buzzwords in Brussels.
“It is precisely these capitals that are most eager to allocate money to those new objectives, but taking it from somewhere else rather than from their own pockets”
The European Commission’s proposal envisions a budget of 1.7 trillion euros between 2028 and 2034, equivalent to 1.26% of gross national income. For the so-called “frugals” —the countries that do not want to see the Union’s budget increased—, that figure is unacceptable, since the current MFF represents 1.13% of GNI. This game of numbers, however, has a trick: the reality is that, if you deduct from that figure the debt service of debt like Next Generation EU, the instrument created to reactivate the economy after the coronavirus, and which runs up to around 21 billion euros a year, the size of the MFF stands at only 1.15%. Spain calls for raising it to 2% of GNI, but many member states align with Germany and the Netherlands, among them the usual suspects of the Nordic bloc, such as Sweden, Denmark or Finland.
Moreover, the Commission proposed a “modernization” of the budget with national envelopes in which each member state would have a greater level of decision on where to place the European funds, following the Next Generation EU model. This measure has raised the ire of regions, some member states and a significant portion of the European Parliament.
“Without them, the choice is hard. Either increase national contributions or reduce the spending capacity”
A way out of the stalemate regarding the size of the MFF lies in two formulas. The first is to refinance part of the debt and extend the repayment period, which would reduce the annual burden, an option discussed in Nicosia two weeks ago. The other involves new own resources, i.e., “taxes” that directly feed the MFF. This is a long-standing idea, somewhat divisive, but sources from the Community indicate that it could be indispensable if the deadlock is to be broken. “Without them, the choice is hard. Either raise national contributions or reduce the spending capacity, which would mean less Europe exactly when more Europe is required,” argued Ursula von der Leyen, President of the European Commission.
Costa and the Cypriot presidency seek to keep pressuring the leaders, and the next item on the plan is to present at the June summit what Brussels’ jargon calls a negobox, a negotiation box with all the line items, figures, contributions and payments, the true battleground where each capital begins to fight for every euro and for every priority. The December 2026 target is not a whim. European leaders want to have an agreement before the French presidential elections of 2027, worried about who will occupy the Élysée Palace from that point on. And although the trenches are deep, many sources agree that there is a real willingness to move forward and secure the agreement in time.
