FINANCIAL PERSPECTIVES: COMMISSION WANTS BUDGETARY AMBITIONS TO CONFORM TO EU'S POLITICAL OBJECTIVES.

Justifying the modest nature of his proposal, Mr Prodi said that certain Member States are demanding a ceiling of just 1% of GDP of a 27-member EU for the financial perspectives, i.e. Euro 119 billion in 2011, a figure that would not even cover existing commitments. Mr Prodi therefore accompanied his minimalist scenario with additional options demonstrating the need for a more generous spending ceiling. For example, Euro 3.5 billion more than under the basic scenario would be needed in 2011 to finance the 29 infrastructure projects presented in the context of the Growth Initiative. A further Euro 4.7 billion is required to finance the phasing out of Objective 1 regions currently covered by the Cohesion Funds but which will fall foul of statistical adjustments following the entry of poorer regions from Eastern Europe, pulling down the European average; and up to 3 billion to integrate the European Development Fund into the budget. Mr Prodi outlined a number of scenarios: with financial perspectives at 1.10% of GDP, the basic hypothesis would be raised by Euro 10 billion in 2011, and at 1.15% by Euro 16 billion. Maintaining the financial perspectives at 1.24% of GDP, as already proposed in Agenda 2000 for the period 2000-2006, would bring in an extra Euro 27 billion, and a figure of 1.30% an extra Euro 34 billion, including 10 billion in reserve.

Road map for an enlarged Europe.

The Commission outlines three priority strategies to assist the Council and Parliament in determining the correct level of own resources:

- sustainable prosperity. One of its constituent parts remains the Lisbon and Gothenburg strategies but it will also build on the reformed legacy of regional policy and the common agricultural policy.

- The Union in the service of its citizens. This category would include the area of freedom, security and justice (AFSJ), information policy and support for the free movement of persons.

- The Union as a global player facing political challenges and security threats.

Alongside the broad economic policy guidelines (BEPGs), a "road map" will enhance the coherence of these political priorities by setting indicators, deadlines and objectives on the basis of which a proportion of budget allocations will be defined.

Budget categories.

These three priorities reflect the new structure of the financial perspectives for 2007-2011, identifying 5 budgetary headings, of which the first three fall under the same category, "sustainable development"...