Martin Callanan MEP: The year ends with tensions over the EU budget but progress on some other important issues

Martin Callanan MEP is Chairman of the European Conservatives. Follow the ECR Group on Twitter.

As MEPs met for their last full session of the year there was a mood of defiance in the air.

Buoyed by what they see as the pinnacle of their great project – the awarding of the Nobel Peace Prize – federalist MEPs have been looking to pick as many fights as possible with national governments. For some in the European Parliament, the nation states of the EU are failing to see the overarching European interest, preferring instead to defend their national interests at the expense of the project. For them, such selfishness must be challenged by ‘pro-European’ forces.

Nowhere is this out of touch mentality more prominent than in the various discussions surrounding EU budgets both for next year, and for the next seven-year period from 2014 to 2020.

Of course, we all know where the majority of MEPs stand on the longer-term budget. They have threatened to veto any deal that does not see an increase in real terms. Personally, I think there’s a lot of sabre rattling going on and the bravado of many MEPs will buckle the moment there is a deal and leaders like Merkel, Rajoy and Hollande get on the ‘phone and order their MEPs to back it.

However, in preparation for this fight, MEPs have been using the talks around the 2013 budget as a proxy battle for the tough negotiations ahead next year.

The short background to the 2013 budget row is this: a majority of MEPs and the European Commission wanted a 6.8 percent increase. National governments were only prepared to accept 2.79 percent (and the UK and others even voted against this figure).

Both sides enter into a time-limited negotiation in an effort to reach a deal. However, this year was even more complicated because the European Commission had effectively run out of money for 2012 and MEPs refused to even talk about the 2013 budget until they had agreement on the extra money they wanted for 2012.

We had reached a stand off caused by intransigence and downright pettiness from the MEPs leading the budget talks.  For these MEPs, this was a battle between national governments and their selfish interests (such as paying down their deficits and educating people) and the wider European interests. Our man on the negotiating team, Richard Ashworth MEP, had several heated exchanges with his colleagues and when the European Parliament President boycotted some of the talks, he rightly said, "This crisis requires calm heads, open ears and an understanding of political reality. Instead we have abrasiveness and flexing muscles, which will help nobody."

Thankfully, at the last minute, the parliament backed down and agreed the 2013 budget along the figures agreed by national governments, but with six billion (instead of the originally demanded nine billion) to cover the black hole in the finances for this year. We still could not accept this amount and we voted against.

My fear is that as we reach the end of the current seven-year budget, national governments are submitting all their receipts for EU funded projects. The cash on hand won’t be available to pay them – making this Oliver-esque, ‘please sir, can I have some more’ situation likely next year too. This is why the entire manner in which the EU sets its budget needs to change. Instead of waiting for receipts to come in and asking for more when the well runs dry, we need a system that looks at the policy challenges the EU has, and directs money towards them. If we do that then we can still help cross-border projects in areas such as research, but we can also have a much tighter and smaller budget.

THE BANKING UNION AND THE EUROZONE

As the EU prepared to hold yet another summit – less than a month after the last one – MEPs discussed the proposals for a ‘Banking Union’ and further integration of the Eurozone with Commission President Barroso. I don’t want to hog the speaking time for these keynote debates so ECR group Vice-President Geoffrey Van Orden spoke for the group. His speech can be found here. He said that people want more control over their own lives, and less control by Brussels. “Europe needs to do less, better,” he said and he called for a different relationship in the EU, with “different circles of engagement overlapping at the centre.”

Geoffrey also raised concerns about a proposal put forward by the President of the parliament, which would create a new committee dealing with euro-related matters. Its proposed membership would consist of MEPs from euro countries, those countries committed to joining the euro, and those countries in the fiscal pact. In other words, every country except the UK. Clearly this is unacceptable and we would be extremely concerned about decisions being made that might affect the City of London, with British MEPs shut out of the talks.

Surprisingly, on Wednesday night, agreement was reached on the Banking Union plans, which would see major European banks directly supervised by the European Central Bank. With less market pressure at present, it seemed Germany wanted to drag its feet and agreement looked unlikely. However, in the early hours of the morning, a deal was struck, which the UK government believes will allow the Eurozone to do what it needs to do, with suitable safeguards in place to ensure that we are not outgunned when it comes to matters affecting our own financial services industry. The proof of the pudding will be in the eating, in my view.

THE FINANCIAL TRANSACTIONS TAX

Also on the agenda was a vote on the proposed introduction of a Financial Transaction Tax in ten EU countries, including France, Germany, Italy and Spain. The ten countries are moving ahead under so-called ‘Enhanced Cooperation’, which enables them to agree a policy without all 27 countries subscribing. Thanks to a lot of work by Conservative MEPs like Kay Swinburne, Vicky Ford and Syed Kamall, and a strong approach from our government, the UK was able to see off this wealth-destroying tax at European level. If some countries wish to go ahead anyway then we cannot stop them but we can warn them of the consequences to their financial services competitiveness.

PATENT REFORM

Another piece of legislation agreed under the ‘Enhanced Cooperation’ procedure was a Community Patent, which was first discussed in 1973. In effect, this means that if you want to patent a product, you won’t need to apply in each EU country separately. The cost of a patent in the Single Market is currently 18 times that of the USA, making protecting intellectual property a cumbersome and expensive affair, particularly for small innovative businesses. The agreement does not reach to Spain and Italy because of a dispute over translations. In order to keep the costs down, each patent will only be translated into English, French and German – a move that understandably Italy and Spain had opposed. So, for now at least, they will stay outside, but the benefits for British businesses will soon become clear. As my colleague Sajjad Karim, who has worked extensively on the Patent for many years, said: “It has been a long time coming, but this package of measures should offer reassurance to our brightest and best.”

AIR TRAVEL

MEPs also voted to reject proposals that would liberalise airport ground handling staff. The plans will now go back to the transport committee for further work. The parliament found itself surrounded by several thousand (mostly German) baggage handlers who had taken the day off from losing my suitcase and decided to protest against competition. The UK has already liberalised its ground handling services and, for us, these EU proposals were actually likely to add all sorts of unnecessary red tape onto our industry. So we joined those MEPs voting to reject the legislation. Explaining why we would not be supporting the proposals, Jacqueline Foster (who knows more about the airline industry than Stelios himself) said the report, “involves the input of the ‘unemployment committee’, as I call it, and the requirements for contractors under this regulation. When a contractor replaces a company at an airport, it is required to employ the staff of the previous company. What the new company is supposed to do with its own employees, I have no idea.” So we voted against this prescriptive proposal, and we will continue to work on it so that we can increase competition at all European airports, without the usual job-killing trimmings that came with it.

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That’s it for this year. It has been another tumultuous one for the EU, and an interesting and productive one for me and the ECR group, which has enjoyed a number of successes and continues to grow on the European landscape. As we head into the last full year before the European elections, I am looking forward to reporting back on further successes for our group.

I wish you a very merry Christmas and a happy and successful new year.