US embassy cable - 05BRUSSELS2419

UNCLAS SECTION 01 OF 02 BRUSSELS 002419 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, EFIN, TU, EUN, USEU BRUSSELS 
SUBJECT:  BARROSO CALLS FOR EU BUDGET COMPROMISE; 
NEED FOR "SERIOUS" DEBATE ON TURKEY'S ACCESSION 
 
SUMMARY 
------- 
1.  European Commission President Barroso on June 22 
said the EU could face "paralysis" unless its budget 
quarrel was settled quickly.  Barroso said a clause 
permitting review of the budget situation in 2008 
might break the deadlock.  He cautioned against 
"explicitly" linking farm spending and the British 
budget rebate.  On EU enlargement, Barroso said the 
EU should "seriously discuss the signal" sent by the 
French and Dutch electorate regarding Turkey.  END 
SUMMARY. 
 
BUDGET COMPROMISE NEEDED 
------------------------ 
 
2.  Speaking at a press conference, Barroso 
underlined the urgency of reaching agreement on the 
EU financial framework for 2007-2013: "There is a 
risk of paralysis if we don't have a decision soon. 
This could have very negative consequences, 
especially in the new Member States."  Negotiations 
should resume on the basis of the work of the 
Luxembourg Presidency.  Barroso said the Commission 
would give its "utmost support" to the upcoming 
British Presidency, though the first responsibility 
clearly lay with the Member States.  The Presidency 
has the lead in this matter and should take the 
initiative in the search for compromise: "More than 
any other Member State, the Presidency has to 
reflect on the need for overall consensus." 
 
A REVIEW CLAUSE? 
---------------- 
 
3.  Barroso suggested this might take the form of a 
clause permitting review of overall EU spending in 
the course of the 2007-2013 period covered by the 
new financial framework (Note: the proposal to EU 
leaders last week was for the review to take place 
in 2008).  Although it was "not reasonable to put 
everything into question," he said, there should be 
a provision allowing the EU to adapt to changing 
circumstances. 
 
THE CAP, THE REBATE, FRANCE AND THE UK 
-------------------------------------- 
 
4.  Asked whether he thought the 2002 agreement 
setting the level of Common Agricultural Policy 
(CAP) expenditure through 2013 should be revised, 
Barroso said: "We reached an agreement in 2002 and 
that agreement remains standing.  We can only ask 
all to make a compromise, a compromise on the CAP 
also, a compromise on the British rebate.  We don't 
have to explicitly link them, but we can ask Member 
States to get out of rigid positions."   Barroso 
added: "If our British friends think they are going 
to get everything they want, they are mistaken.  If 
our French friends think they are going to have 
everything they want, it's also a mistake."  In the 
medium-term, the EU budget will have to undergo "a 
certain amount of revision" and a review of its 
priorities, hence the idea of a review clause. 
 
5.  Noting that the Commission had just adopted a 
proposal for the reform of the sugar market, Barroso 
argued that the CAP could not be presented as frozen 
in stone.  At the same time, he noted that the six 
countries (read: the net budget contributors, 
including the UK) who had signed a 2004 letter 
calling for overall EU spending to be limited to 
1.0% of total EU GDP, had also reaffirmed in that 
letter the 2002 agreement on CAP expenditure. 
 
DEBATE ON EU'S FUTURE 
--------------------- 
 
6.  Barroso said the Commission was planning to hold 
a seminar in September on the future of Europe.  The 
Commission will also prepare a strategy paper on 
Europe's future, for presentation to EU leaders in 
June 2006, and a reflection on the future of the 
European social model, which would be an important 
contribution to the debate. 
 
TURKEY'S ACCESSION PROSPECTS 
---------------------------- 
 
7.  Asked about the impact of the current 
constitutional situation on enlargement, Barroso 
said: "We are all aware that we should discuss 
seriously the signal that was sent by the electorate 
concerning Turkey."  He added, "it would be a 
mistake to ignore that we need the support of member 
states and citizens for enlargement to proceed.We 
shall start negotiations with Turkey on October 3 
but it is an open-ended process.  That doesn't 
necessarily say what will be the conclusion of that 
process." 
 
COMMENT 
------- 
 
8.  By calling on the EU governments (and the 
upcoming UK Presidency, in particular) to compromise 
on the budget, the Commission is drawing attention 
to its behind-the-scenes activism in the budget 
negotiations and trying to find a way for the EU-25 
to reach a face-saving compromise in a not-too- 
distant future.  Coming after the comments by his 
predecessor Romano Prodi, who just said in an 
interview that the "conditions for Turkey's 
accession to the EU in the short or mid-term no 
longer exist," Barroso's remarks are also the latest 
in a series of comments by EU leaders casting doubts 
on Turkey's accession prospects. 
 
MCKINLEY