Saxony-Anhalt election raises urgency for EU budget deal amid far-right surge

BRUSSELS — The prospect of the far right running a German state for the first time since 1945 will provide the clearest warning yet to EU governments about the urgency of striking a deal on the bloc’s next seven-year budget.

Sunday’s regional election in Saxony-Anhalt is giving European diplomats cause to sound the alarm over how disagreements between countries will only get worse next year. With 2027 set to see votes in France, Spain, Italy, Poland, Greece, Estonia and Slovakia, the prospect of other Euroskeptic voices sweeping to power — with a mandate to make the EU less expensive and less powerful — is focusing minds on getting a deal on the budget before the end of the year, four diplomats and officials told POLITICO.

With its mix of nationalism and anti-migration rhetoric, the Alternative for Germany (AfD) is on course to be within a few seats of winning an absolute parliamentary majority in the east German state on Sunday. While that won’t directly change the country’s national leadership, votes in other countries next year might.

“With four of the five largest EU member states voting in parliamentary or presidential elections, it will be more difficult to reach an agreement, especially if we look at the rise of anti-European populism,” said Siegfried Mureșan, the Parliament’s lead lawmaker on the budget. “Everyone understands the obvious negative consequences of a delayed adoption and entry into force of the MFF [the Multiannual Financial Framework, the seven-year budget].”

Negotiations on the budget — which must be agreed by all 27 governments — have been deadlocked for months. Neither of the two main groups of countries, those that want the EU to have more to spend and those that want it to have less, has seen an advantage in giving ground so far. European Council President António Costa is currently touring capitals in an effort to narrow differences.

“Saxony-Anhalt could really define the fall,” said one of those diplomats involved in the talks. “It will make it clear that it is crucial to get agreement this year. If we don’t get it in December, it can’t be February or March, that will be too close to the French election.”

Brussels is spooked by the prospect of France’s far-right veteran Marine Le Pen winning the country’s presidential election, scheduled to start on April 18, and following through on her campaign pledge to halve France’s contribution to the EU budget, the diplomats and EU officials said.

Macron’s challenge

But while at the European level that adds urgency for France to get a deal before the election, domestic pressures make it more complicated.

Macron, whose far-right opponents are pushing for massive reductions in the country’s own EU contributions, is under pressure to get a deal that won’t worsen Paris’ national economic woes. He is pushing for new EU-wide taxes, known as “own resources,” as a way to pay for the bloc’s priorities without capitals being stuck with the bill themselves. France wants to give Brussels the power to put levies on U.S. digital giants, foreign polluters and online gambling.

“Any agreement without own resources will be a no-go for France,” said an EU official. “We get it.”

The disagreements got another airing at a meeting of European ministers which kicked off on Thursday in Ireland, which holds the six-month rotating presidency of the Council of the EU. Germany is leading a group of countries that want the EU budget to be smaller than that proposed by the European Commission, but any cuts will hit the very areas Brussels most wants to strengthen — competitiveness, defense and security — EU Budget Commissioner Piotr Serafin told reporters on the sidelines of the meeting.

Those top priorities could “become the first victims of cuts,” he said.

The budget will be discussed at a summit of EU leaders on Oct. 15, where Ireland will present an updated negotiating position. An additional summit is expected to be held Nov. 26-27, two officials confirmed, to advance the talks and a final, potentially very long, meeting will take place in December, where leaders will be persuaded not to leave without striking a deal, they said.

‘Difficult choices’

Countries are still split on the scale of the budget, with a handful of wealthier countries led by Germany pushing for hundreds of billions of euros to be shaved off the seven-year spending plan. Others, including Romania, Poland and other net recipients of EU funds, want to maintain the size of the pot. Meanwhile, the EU’s frontier countries have launched a push for more funding to deal with Russia’s hybrid threats and shore up their economies.

“The next EU budget will inevitably involve difficult choices. There will never be enough money for every priority,” Estonian Prime Minister Kirsten Michal said following a meeting with Costa last week. “But the choice should be clear: Europe cannot ask its eastern members to carry a growing security burden while funding priorities as if the world had not changed.”

The deadlock, while profound, looks likely to be resolved by a flurry of talks for the rest of this year, those involved in the negotiations said. “Everybody seems to be aware of and committed to the end-of-year deadline,” said one of the officials. Costa’s “key message has been we need to get this deal over the line by then because of the context.”

Asked whether elections — including in Saxony-Anhalt — were creating a sense of urgency in budget talks, Ireland’s Europe Minister Thomas Byrne, who is steering the negotiations on behalf of the EU presidency country, said Dublin had a simple agenda: “To get it done by the end of the year in order that the legislation can be passed next year.”

Another diplomat, from a country that wants to see the budget to be smaller than that the Commission proposed, put it more bluntly: “If you want to do it, you have to do it within the next three months. After that, maybe the party is over for all of us.”