European Council Note - 20/21 February: Coming to Terms with Failure

The latest Briefng Note documents and seeks to explain a failure. The special European Coun cil of 20-21 February did not just fail to reach an agreement on the EU's Multiannual Financial Framework for 2021-2027. It failed to indicate how one might be reached in the coming weeks or months. MFF negotiations are always diffcult and, in order to fnish the job, the heads of state and government had had to meet at least twice on previous occasions. The breakdown on this occasion was however ominously complete. There are many reasons for this failure. Four nevertheless appear to have been particularly relevant: ˙ The lethal juxtaposition of three irreconcilable factors. Firstly, the emergence over the pre vious fve years of a new, more ambitious EU agenda in the face of climate change and other major challenges, all of which required, and therefore raised expectations of, more rather than less EU expenditure. Secondly, the dependence of a huge clientele in most if not all member states on the maintenance of EU funding for Cohesion and the Common Agricultural Policy. Thirdly, Brexit, which meant that at a time when it needed to spend more, the EU was bound to have revenue at least 10 billion euros per annum less than in the current MFF. ˙ The entrenchment of group think. Caucuses are normal and healthy. Before and at the February European Council, however, the two main caucuses, the Frugal Four, led by Mark Rutte, and the Cohesion Group, led by Antonio Costa, displayed levels of collective intran sigence which made agreement impossible. ˙ The inability of Angela Merkel to take the lead in breaking the impasse. Macron's marginal utility was par for the course as far as French presidents in MFF negotiations are concerned. Merkel, whose position at home had been seriously undermined in the previous fortnight in Thuringia and then in Berlin, could not however step into the breach, even though on the Friday morning she tried to do so. ˙ The failure of Charles Michel, the European Council president, to maintain his grip on a process which, as a result of his own initiative, had become Michelsache as much as if not more than Chefsache . Since 21 February, the MFF negotiations have been overtaken by the Covid-19 crisis. This has at one and the same time made an early resumption of the process improbable and cast doubts on some of the factors which militated against success in February. In a situation of unprec edented gravity, European Council members, both severally and collectively, have been chal lenged 'to think outside the box', particularly about the role of public fnance in facilitating post-crisis recovery. And some at least have begun to do so At the same time, the stock of the intransigents in general and of Mark Rutte in particular has fallen sharply. Thirdly, Michel has been given a fresh lease of life. Whenever therefore the MFF negotiations resume they will do so in a very different environment.