Ireland faces tough EU budget talks as presidency begins

BRUSSELS — Ireland faces the daunting task of forging a swift agreement on the EU’s next seven-year budget, days after wealthy Northern European countries killed a proposal suggesting modest cuts.

That will be the crucial phase to reach a budget agreement between EU governments — one of the toughest nuts to crack in the Brussels machine.

The Commission’s budget proposal — worth nearly €2 trillion, including €166 billion in Covid-era debt repayments — governs the bloc’s central spending on everything from agriculture to defense from 2028 to 2034.

The EU’s 27 leaders are racing to finalize an agreement in December — shortly before the end of the Irish presidency — ahead of planned general elections in France, Italy, Spain and Poland in 2027 that might radically change the direction of the talks.

In an interview with POLITICO, Jordan Bardella, the leader of France’s National Rally and presidential front-runner, said he would seek to halve France’s contribution to the EU budget if he wins the election.

The time pressure raises the stakes for Ireland’s diplomats to shepherd the EU’s 27 countries close to a deal ahead of a crucial December summit slated for Dec. 17 where, in the words of an EU diplomat from a wealthy country, “there will be blood on the walls” as the thorniest issues aren’t usually settled until the very last minute.

Ireland will have to clear the air in the negotiating room after the Cypriot budget proposal — which trimmed the total size of the Commission’s budget proposal by a mere 2 percent — fueled a revolt by the EU’s wealthier countries that favored a bigger cut.

“All the changes are going in one direction. That is what is worrying for the dynamic in the room,” said the EU diplomat, arguing that Nicosia’s negotiating document, known in EU circles as the nego box, overwhelmingly favored countries supporting a bigger EU budget.

“There will be some work for Ireland to do in terms of restoring the balance.”

The moderate frugal

Like any other rotating Council presidency, Ireland must broker the budget discussions in a neutral way and draft a nego box acceptable to everyone.

The challenge is to strike a balance between a coalition of 17 countries — known as the Friends of Cohesion — that is pushing for more agriculture and regional funding, and a rival camp of wealthier countries, including Ireland, that is demanding drastic cuts.

After presenting the nego box, Cyprus was caught in the crosshairs of the budget battle.

Wealthy countries, who contribute more to the budget than they receive and want a smaller overall pot, accused Nicosia of siding with the rival camp, to which it usually belongs.

As a small country with a knack for consensus-building, Ireland is well-placed to stay clear of the budget mudslinging.

Finance Minister Simon Harris said on the day the nego box was published that Ireland is “ready to assume that honest-broker role in twenty days’ time, and we look forward to listening and engaging with member states.”

The holder of the presidency is expected to relinquish its allegiance to any budget tribe and defend the broader EU interest during its six-month stint.

In normal times, Ireland is not seen as a hard-liner. “They are moderate frugals,” said a second EU diplomat from the rival camp.

Having transitioned from net beneficiary of the EU budget to net contributor after achieving record economic growth in the 1990s, Ireland enjoys good credentials among both groups of countries.

With its strong agricultural lobby, it is likely to resist calls from Germany and the Netherlands to slash farming subsidies worth a minimum of €297 billion over the next seven years. But as one of the EU’s wealthiest countries, it supports an overall cut in the budget.

In a crucial test of its presidency, Dublin is expected to circulate a new nego box with revised spending figures in October, which will pave the way for the final furlong of the negotiations.

European Council President António Costa — who has staked his political capital on securing a deal in December — will travel across EU capitals in August and September to gauge leaders’ views, and take control of the negotiations after a summit in October.

It is in those last two months that the most sensitive issues in the negotiations — such as EU-wide taxes and controversial budget discounts for wealthier members, known as rebates — are expected to be resolved.