Date: 15 February 2006
 
Speaker: Sven-Olof Petersson, Permanent Representative of Sweden to the EU
 
 
Swedish Permanent Representative Sven-Olof Petersson told participants at a CEPS lunchtime meeting on 15 February that negotiations on the EU budget had been a success on four main counts:

• the breakthrough on the principle of revising the British rebate
• the reduced overall expenditure level
• the reprioritisation of expenditure
• the increased amount of structural funds that will go to the new member states

The diplomat explained that, from his point of view, the negotiations had been a success because Sweden had secured most of the results it had been calling for.
 
More than 50% of structural funds to the new member states
On the fourth area of success, the increased amount of structural funds that will go to the new member states, he stressed that under the current agreement more than 50% of the structural funds will go to the new, needier, member states, which would not have been the case had the original Luxembourg proposal been adopted.
Sweden opposed to handing out funds to poor regions in rich countries
Petersson explained that his government remains opposed to the principle of handing out funds to poor regions in rich countries, since the development of the former should be a matter for the national governments of the latter. In this regard, the problem was not so much the size of a given country’s contribution to the EU budget but how the money was spent.
 
Little room for concessions in talks with the Parliament
Looking ahead, he made it clear that he saw little room for concessions in the negotiations with the Parliament that will have to take place before the budget is adopted. However, he was still hopeful that, after the beginning of the “real” negotiations in March, an agreement with the Parliament could be reached by April.
 
CAP reform – renationalisation of the CAP?
Concerning expenditure, the Swedish diplomat did not shy away from the thorny issue of CAP reform. He admitted that the ‘gang of six’ (member states that had been advocating a capping of the EU budget at 1% of the combined GNI) had been “split down the middle” as soon as the common agricultural policy was put on the table. For the longer term, he quoted renationalisation of the CAP as one of the possible solutions for the problem, but emphasised that, before any measure is adopted, there will be a need for “substantial studies” that “thoroughly assess the impact [of such a measure] on the internal market”.
 
Pressure for change may come from a look at the structure of the economies of some of the countries that may join the EU a few years down the line, and from the fact that even France is expected to become a net contributor to the CAP by the year 2015. Generally speaking, while Petersson acknowledged that the traditional Franco-German engine of the EU may be running out of steam, there were still strong external forces that will continue to push the member states to find common solutions for the problems facing Europe.
 
Enlargement – impossible to “shut the door” on the Balkans
In his concluding remarks, the Swedish Permanent Representative touched upon two topical issues. First, he was keen to stress the success of enlargement, and pointed out that, notwithstanding the current fatigue, there will certainly be further enlargements of the Union. In particular, in the long run it will prove impossible to “shut the door” in the face of the Balkans, since there would be a high price to pay for this, especially in terms of the soldiers and policemen that one would need to send to the area.
 
Even a watered down services directive a step in the right direction
Secondly, Petersson explained that, since the wounds caused by the recent row with Commissioner McCreevy had not yet healed, the Swedish government had to keep a low profile on the debate concerning the services directive. However, he underlined that even the watered down agreement that was now on the cards (with the exclusion of the country of origin principle for the temporary provision of services) would be a much needed step in the right direction, especially for a country like Sweden, which exports more services than most of the other member states and has a more deregulated services sector.