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FINANCIAL PERSPECTIVE 2007-2013:

FINANCIAL PERSPECTIVE 2007-2013:. Domination of National Interests. This article confirms the validity of the hypothesis that national interests were the driving force behind the process and outcome of negotiations for the EU’s next financial perspective for 2007-2013.

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FINANCIAL PERSPECTIVE 2007-2013:

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  1. FINANCIAL PERSPECTIVE 2007-2013: Domination of National Interests

  2. This article confirms the validity of the hypothesis that national interests were the driving force behind the process and outcome of negotiations for the EU’s next financial perspective for 2007-2013.

  3. Institutional framework of negotiations European Commission Council of European the EU Parliament Inter-institutional Agreement

  4. Negotiations within the “Council” • European Council Level • Council level-GAERC • COREPER 1 level • Working groups level

  5. Hypothesis and theoretical background • Hypothesis:National interests have dominated over broader community interests in FP 07-13 negotiations and contributed to status quo outcome. • Non- cooperative coalition theory: .Coalitions act as a single player maximazing their payoff .Coalitions behave non-cooperatively towards outsiders .No implicit assumptions about the set of possible outcomes .Outcome depends on the stable structure • Implications for FB 07-13:The outcome of negotiations

  6. Financial perspective 2007-2013 Commission’s Interinstituonal Relative proposal agreement chance (February 2004) (June 2006) (06/04) Appropriations billion % of Billion % of % for commitments EUR total EUR total change 1 Sustainable growth 462 45% 382 44% -17% 1 A Competitiveness 122 12% 74 9% -39% 1 B Cohesion 340 33% 308 36% -9% 2 Natural resources 400 39% 371 43% -7% CAP(1st pillar) 301 29% 293 34% -3% CAP(2nd pillar) 99 10% 78 9% -21% 3 FSJ(3A)and citizenship(3B) 21 2% 11 1% -49% 4 EU as a Global partner 85 8% 49 6% -42% 5 Administiration 58 6% 50 6% -14% 6 Compensation 0 0% 0,8 0% n.a. TOTAL 1.025 100% 864 100% -16%

  7. Partial NBBs of EU member states have two interesting properties: • First,positive partial NBBs improve whereas negative partial NBBs deteriorate a member state’s total NBB. • Second,member state with posittive partial NBBs are net recipients, whereas member state’s with negative partial NBBs are net contributors under a particular issue.

  8. Methodological Issues in Cluster Analysis • Cluster analysis forms new clusters or assigns cases to existing clusters based on distance as a measure of (dis)similarity between statistical unıts accordıng to the clustering variables.

  9. Results and AnalysisCluster Analysis Cluster centroids according to normalized partial net budgetary balances

  10. Results and AnalysisHypothetical and Actual Outcome HYPOTHETICAL • Coalition of net contributors vs. coalition of net recipients. • Strong and mostly opposing interests of coalitions in cohesion funds. • Strong and mostly coincident interests of coalitions in CAP funds. • Weak interests in competitiveness funds. ACTUAL • Coalition of the “Six” vs. coalition of the “Friends of the Cohesion policy” • Reductions in cohesion funds from Commission proposal strongly opposed by beneficary countries. • General adherence of member states to the 2002 CAP agreement. • Large reductions in competitiveness funds from the Commission proposal.

  11. Results and Analysis Policy Imlications Factors contributing to juste retour problem • Division of powers between the EU vs. national government level is conducive to national interests. • Redistribution across member states is a highly visible domestic political issue. • Solidarity between EU member states has limits. • Choice of expenditure instruments of the EU budget “poisons” the juste retour issue. • UK rebate and rebates on rebate perpetuate the focus on net balances.

  12. Conclusion • Hypotetical MS coalitions based on quantified national interesting correspond well to the actual MS coalations during FP 07-13 negotiations. This confirms that national interests have played a major role in FP 07-13 negotiations. • Non-cooperative coalition theory suggest that national interests were not important only for the process of FP 07-13 negotiations but were also the drivers of the final outcome. However, further research is required to make conclusive judgements. • Policy implication: 2008/09 review of the EU budget should pay close attention to the negotiating process as such and the issue of national interests(net budgetary balances).

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