Portugal wins after Blair’s Brussels compromise.jpg

Portugal wins after Blair’s Brussels compromise

PORTUGAL HAS emerged a substantial beneficiary from the new EU budget deal agreed by Britain, the current holders of the Commission’s rotating presidency, in an agreement that should boost future spending on infrastructure, writes The Resident’s reporter Gabriel Hershman.

The revised budget offers increased funds to Portugal than were first outlined when Luxembourg held the presidency in June. The good news came after Britain accepted a cut in the rebate it receives from the Commission – a dispensation obtained more than 20 years ago due to the UK’s special status.

Britain finally agreed a seven-year package for the period between 2007 and 2013, following protracted negotiations culminating in Blair’s offer to increase a proposed eight billion euro cut from the rebate to 10.5 billion euros. Britain will now surrender around 20 per cent of the rebate it was due to receive during the period concerned. The overall budget for 2007-13 is now pegged at 862 billion euros, or 1.045 per cent of the EU’s combined gross national income, half way between the figure the UK first proposed and that first set out in June.

Sócrates hails very good news for Portugal

Portugal, unlike Britain, emerged an unqualified beneficiary in the final deal, collecting more than 22 billion euros over the seven-year period – or 8.8 million euros a day – well above initial proposals six months ago.

The agreement places EU funds of 21 billion euros at Portugal’s disposal. Breaking the figures down, that means 16,420 billion euros in structural funds and 2,722 billion euros in cohesion funds (the main instruments for supporting social and economic re-structuring in EU countries), which should help the Portuguese government in its battle to balance the budget. In addition, another 2,143 billion euros will come from the EU’s Rural Development and Fisheries funds.

Portuguese Prime Minister José Sócrates described the agreement as a very positive result for Portugal and “even better than the one secured in June”. Sócrates also praised the role of EU Commission president and former Portuguese Prime Minister, Durão Barroso. “The fact that we have a Portuguese citizen at the helm of the European Commission has also contributed towards the final result,” he said.

Initial political reaction was favourable, even from traditionally hostile quarters. Ribeiro e Castro, leader of the right-wing CDS-PP Popular Party, congratulated Sócrates and Foreign Affairs Minister, Freitas do Amaral, for their success in the negotiations, describing the budget as good news for Portugal.

Portugal will now also receive 85 per cent community co-financing in structural projects from the cohesion fund, as opposed to the previous 80 per cent ceiling. In addition, Portugal can use community funds for three years after authorisation of the budget instead of the current twoyear deadline. The only dampener to the optimistic mood is that, from 2013 onwards, when the next spending plans are decided, Portugal is likely to receive much less funding when poorer countries enter the EU.

Barroso had branded Blair

“the Sheriff of Nottingham”

Blair faced intense pressure to agree to a reduced rebate in order to help new member states joining the EU. Britain, for its part, was trying to keep open prospects of cuts to the Common Agricultural Policy before the end of the seven-year period. But Blair failed to achieve the firm undertaking that the Euro sceptic press in Britain were demanding. Under the terms of the new agreement, the European Commission has pledged only to hold a “full and wide-ranging” review of all EU spending, including the Common Agricultural Policy and the British rebate.

Last month, in unusually direct criticism, EU president Durão Barroso had said he “did not expect Blair to take the role of the Sheriff of Nottingham”, demanding an excessive rebate and thereby “robbing from the poor to feed the rich”. But, by the end of the negotiations, Blair’s compromise had earned him unlikely plaudits from French President Jacques Chirac, who praised Blair’s “flexibility”.

Sócrates’ first success as PM

Blair maintained that the settlement allowed Europe to move forward and avoid a serious crisis. He insisted the deal would ensure new member states received the development aid they needed. But it seemed likely that Blair would receive a rough reception when he defended the settlement in the Commons. Acclaim from the EU, and in particular France, usually provokes the opposite reaction in London. By contrast, Portugal’s budget victory probably represents Sócrates’ first real victory in his 10 months as Prime Minister, a period that had been marked by rancour and withering attacks from all sides. For once, the critical voices are likely to be silenced.