Nečas applauds budget deal

The Czech Republic will no longer be the top per-capita recipient of funding from the European Union, but Prime Minister Peter Nečas has insisted a threat to veto the 2014-20 budget helped deliver more money for the country.

After months of bickering, and a final sleepless night of talks in Brussels, EU leaders agreed Feb. 8 to the first-ever cut in the bloc's budget. The historic deal was achieved despite sharp differences between countries over priorities for the next seven years.

The compromise sets members' total payments to Brussels for 2014-20 at 908 billion euros, a cut of around 3 percent compared with the 2007-13 budget and a win for austerity advocates.

UK Prime Minister David Cameron had warned the EU could not increase spending while many of its members were forced to slash their national budgets.

The budget agreement calls for the Czech Republic to receive 20.5 billion euros from Brussels 2014-20, down from 26.7 billion euros in the current period, but the country will remain in the top five in terms of the cohesion funds through which billions are sent to aid mainly poorer regions.

Czech farmers will also gain further money from the common agricultural policy fund, with 5.4 billion euros to be provided in direct payments in 2011 standing prices and another 1.9 billion euros in support of the countryside.

"The negotiations were very complicated, and I do not deny they were also very demanding," Nečas said.

Ahead of the summit, he said the amount of money proposed for the Czech Republic in the EU funds was too small, and he threatened to veto the negotiations. Eventually the sum was raised by 900 million euros in 2011 prices, with the prime minister declaring his veto threat "meaningful."

"I think it is important to say Petr Nečas and with him the whole country are leaving Brussels as losers," said Social Democrats (ČSSD) Chairman Bohuslav Sobotka Feb. 8.

But State Secretary for European Affairs Vojtěch Belling said the reduction in funding for the Czech Republic was to be expected because of the rise in gross national income. He said the country's net position has dramatically improved, and this was more important than the absolute monetary figures.

However, the prime minister conceded the Czech Republic has had problems with drawing money in the current financial framework, particularly around transparency and the effectiveness of the usage of funding.

Nečas said the country will learn a lesson from these mistakes in the next period, and that it will, for instance, simplify the structure of particular programs and lower the number of individual operational programs. He said it was a relief for the Czech budget that it was eventually agreed value-added tax would be recognized, meaning not only the prices of projects but also VAT would be covered by the EU funds.

This change will deliver the Czech Republic a revenue windfall of 2.8 billion euros.

Andrew Greene can be reached at
agreene@praguepost.com