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Reforming the European Financial Framework
Peter Becker
EU-Consent EU-Budget Working Paper No.5
January 2008

On April 4th, 2006, the European Parliament, the European Commission and the member states agreed on a new Financial Framework for the seven year period 2007-2013 by signing the Interinstitutional agreement on budgetary discipline and sound financial management. One crucial precondition had been the inclusion of a midterm review clause agreement inviting the Commission "to undertake a full, wide ranging review concerning all aspects of EU spending, including CAP [Common Agriculture Policy], and of resources, including the UK rebate." The debate about the substance and goals of this complete overhaul began this spring with the European Parliament's Lamassoure Report on the reform of the EU's own resources system and the adoption of the Commission’s Consultation Paper “Reforming the budget, changing Europe” on September 13th, 2007.
This Paper starts with a short examination of the final compromise on the Financial Framework 2007-2013 and then describes the main lines of conflict defining the very controversial negotiations. Based on this analysis it then identifies the main areas of reform and tries to formulate reform options for the two main spending blocks, the CAP and the cohesion policy, as well as for the revenue side of the EU-budget. The search for the European added value will almost certainly become the key goal of the review. Crucial for the success of the revision process, however, will be the political environment of the process. It is almost guaranteed that the European Parliament will become a major new player when using its new rights granted by the reform treaty. Finally, the paper concludes with the discussion of the prospects of success of the review.


1. Introduction
2. The Outcome of the Negotiations
3. The Defining Lines of Conflict
4. Reform of Spending Policies
5. Reforming the EU’s Own Resources System
6. The Key Points of the Revision Process
7. Potential New Influences
8. Conclusion

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