EU split over budget as Germans push for curbs

EU Budget Commissioner Guenther Oettinger speaks during a news conference in Brussels. (Reuters/File)
Updated 17 September 2019

EU split over budget as Germans push for curbs

  • Divisions over the next 2021-2027 financial framework run deeper than usual

BERLIN: The EU may need to scale back its plans to boost growth and counter climate change if it fails to quickly agree on a long-term budget, European officials said on Monday, as Germany and other northern states push to restrict spending.

The EU administration is funded with a seven-year budget. The size and targets are often subject to prolonged haggling among its member states.

But divisions over the next 2021-2027 financial framework run deeper than usual at a time when the bloc faces risks of a new economic recession and uncertainty over the outcome of the Brexit process — which is expected to lead Britain, one of the largest contributors to the EU coffers, out of the union.

“My big concern is that Europe will be in a difficult economic and geopolitical situation if there is no budget by the first of January,” the EU commissioner in charge of the talks, Guenther Oettinger, told an EU ministers’ meeting in Brussels.

He said the urgency to strike a deal was heightened by the bloc’s weakening economy, with Germany and other EU states stagnating. He said it would take years to find a compromise at the current pace of negotiation.

The long-term financial framework needs to be adopted well in advance of its starting date because it has to be translated into yearly spending programs which also usually require long negotiations.

The EU’s executive commission proposed last year a seven-year budget of roughly €1.1 trillion ($1.22 trillion) which would represent 1.11 percent of the bloc’s Gross National Income (GNI), a measure of domestic output. The estimate does not include funding from Britain, which is planning to leave the EU at the end of October.

But Germany, the EU’s largest economy and the main contributor to the budget, has made it known that it wants to limit spending to 1 percent of economic output, according to a document seen by Reuters. Sweden and the Netherlands openly support Berlin’s more cautious spending plans.

The budget for the current seven-year period also amounts to 1 percent of GNI, but Brussels said it has to go up because of planned higher spending on research, digital economy, border control and defense.

Berlin said the proposed cap would represent a net increase in spending by EU states, as the bloc would have to do without contributions from Britain. It also urged more spending to counter climate change.

The European Parliament, backed by southern and eastern European states who are net receivers of EU funds, wants a bigger budget, set at 1.3 percent of the bloc’s GNI.

Lawmakers also urged further funding for new projects on climate change and for unemployment benefits as mentioned by the commission’s president-designate Ursula von der Leynen in her inaugural speech after appointment in July. Spain’s state secretary for EU affairs, Marco Aguiriano Nalda, said differences between the proposals made it almost impossible to find a compromise before the end of the year.

“I have to express strong worries and reservations on the state of play of the financial framework,” he told his counterparts at a televised session of the ministerial meeting.

Poland’s State Secretary for European Affairs, Konrad Szymanski, told the same meeting that reduced spending caps would inevitably translate into lower ambitions.

A compromise is made more difficult also by plans to make EU funding conditional on upholding the bloc’s values, including the rule of law. Germany called for this “conditionality” in its confidential document reviewed by Reuters.


South Korea seeks arrest of Samsung heir in succession probe

Updated 47 min 59 sec ago

South Korea seeks arrest of Samsung heir in succession probe

  • Jay Y. Lee faces a return to jail just a little over two years after being released from detention

SEOUL: South Korean prosecutors have requested an arrest warrant against Samsung Group heir Jay Y. Lee, they said on Thursday, in the investigation of a controversial 2015 merger and alleged accounting fraud in a suspected bid to aid his succession plans.
The move spells fresh trouble for Lee, who, if arrested, faces a return to jail just a little over two years after being released from detention in February 2018.
Lee already faces trial on a charge of bribery aimed at winning support to succeed ailing group patriarch Lee Kun-hee, and which involved former President Park Geun-hye, and spent a year in detention until the bribery case was suspended in 2018.
Prosecutors said they sought Lee’s arrest on suspicions of stock price manipulation and audit rule violations, among other offenses.
In a statement, Lee’s lawyers expressed “deep regret” at the prosecution’s decision to seek his arrest, adding that he had fully cooperated with the investigation while Samsung was going through management crises.
Prosecutors have been investigating suspected accounting fraud at drug company Samsung Biologics after the Korean financial watchdog complained the firm’s value had been inflated by $3.7 billion in 2015.
Prosecutors contend the violation helped boost the value of its major owner, Cheil Industries, which counted Lee as its top shareholder, and merged with Samsung C&T, a de facto holding firm, Yonhap news agency said.
Samsung requested an outside review of the investigation to weigh the validity of the indictment and the Seoul Central District Prosecutors’ Office is following the necessary procedures, it said in a statement.
Last month, prosecutors questioned Lee, 51, over the latest investigation. He also apologized for a series of controversies around his succession planning.
Lee’s year in detention followed separate charges that he bribed Park to win government support for the 2015 merger which helped tighten his control of South Korea’s top conglomerate.