EU BUDGET: MEMBER STATES REJECT COMMISSION BID FOR GREATER FLEXIBILITY.

Only the Irish and Luxembourg ambassadors were positive about the Commission's figure while others commented that the Council might find it easier to reach an agreement with the European Parliament on this issue because MEPs were only asking for an increase to 500 million.

In its draft inter-institutional agreement (which sets out the rules for spending the 862 million budget agreed by EU leaders in December) tabled on February 1, the Commission called for an increase in the instrument as well as permitting its use for all policy areas. In the past, it has been used only for international crises such as reconstruction in Iraq and Afghanistan and the Asian countries hit by the tsunami in 2005. The Commission also wanted to be able to roll over unspent funds from the instrument in one year to another.

There was also widespread opposition to the Commission's proposal to increase the financial margin for policies covered by the co-decision procedure to 10%. Many delegations said that the current level of 5% was sufficient. The German and Italian ambassadors were particularly strong on this point.

The German delegate also questioned the Commission's logic of automatically factoring in an annual increase of 2% in the budget every year to take account of inflation, saying...