13 Financing the common costs of EU military
or defence operations
| (25144)
—
| Draft Council Decision establishing a mechanism for the financing of the common costs of European Union operations having military or defence implications.
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| Legal base | Article 28(3) EU; unanimity
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | EM of 15 December 2003
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| Previous Committee Report | None
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| To be discussed in Council | No date set but probably January 2004
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but further information requested
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Background
13.1 On 17 June 2002 the General Affairs and External Relations
Council (GAERC) agreed a paper on the overall framework for financing
European Defence and Security Policy (ESDP) military crisis management
missions.[24] This stated
that under any future ESDP military operation, most costs would
be funded on a costs-lie-where-they-fall basis, that is by the
contributing Member State. However, a limited number of costs,
which could not properly be allocated to one Member State, should
be funded as "common costs" from the general EU budget
and be divided between Member States on a GNP-related basis. These
costs are primarily incremental costs for deployable or fixed
headquarters for an EU-led operation.
13.2 On 27 January 2003 the Council approved two
"model" texts to serve as the basis for the Council
Decisions on financing common costs of any given operation.[25]
One option, the establishment of a "mechanism", that
is, a fund, was to be used for the majority of operations. The
second option, post-operation settlement of costs, was considered
more appropriate for urgent, short-term missions. According to
the Minister for Europe (Mr Denis MacShane) both options have
been put into practice for ESDP military missions this year.
13.3 In September 2003, the Council decided that
a permanent mechanism should be set up by 1 March 2004 to finance
the common operational costs of an EU-led military mission.
The draft Decision
13.4 The draft Decision establishes a permanent financing
mechanism (ATHENA) which should help the EU to improve the speed
at which it can launch operations, by removing the need to adopt
a Council Decision establishing a mechanism for every mission.
The aim is that it should be efficient and flexible, reducing
the bureaucratic burden on the Council at the time of launching
a military mission.
13.5 ATHENA is expected to use the existing administrative
bodies of the EU "to the greatest possible extent".
The draft Decision provides that it shall resort to staff made
available, as necessary, by the EU Institutions or seconded by
Member States. It will not have a permanent staff but the administrator
may negotiate with Member States or Institutions so as to designate,
in advance, those staff who could be made immediately available.
13.6 A Special Committee, made up of one representative
of each contributing Member State, will supervise ATHENA. The
Commission will attend its meetings, but shall not have a vote.
Similarly, the operation commander, or his representative, shall
participate but not take part in votes. Representatives of contributing
third States shall participate in the proceedings of the Special
Committee, but will neither take part in, nor be present, when
it votes.
13.7 ATHENA will not have a standing pool of funds.
These will be activated only on the basis of operational needs.
Revenue shall consist mainly of contributions payable by the participating
and contributing Member States and, where appropriate, contributing
third States. The breakdown of contributions between the Member
States from which a contribution is required shall be determined
in accordance with the current GNP scale. The percentage shall
be calculated on the basis of the "Gross National Income
(GNI) own resources" column appended to the latest budget
adopted by the European Communities. A six-member college of
auditors shall report to the Special Committee.
13.8 An annex to the draft Decision provides a definition
of the common operational costs which relate to the active phase
of operations and which shall always be borne by ATHENA. They
include the incremental costs incurred by recourse to NATO equipment,
infrastructure and collective capabilities. A separate annex
defines the costs which are to be borne by ATHENA "when the
Council so decides". Some transport costs and barracks and
lodging could come under this heading.
13.9 Arrangements will be made in advance with third
States on the arrangements for making swift payments of contributions
to any future military operation of the Union to which a third
State decides to contribute. These will take the form of an exchange
of letters.
The Government's view
13.10 The Minister for Europe (Mr Denis MacShane)
says that this proposal is in line with the Government's goal
of allowing the EU to react quickly to emerging crises, under
ESDP, whilst ensuring proper oversight by Member States of expenditure.
It is "now" satisfied with the draft text . He says
that, in particular, the Government has ensured that:
- Overall supervision of the
functioning of ATHENA is carried out by the Special Committee,
which takes decisions by unanimity;
- Any ATHENA staff would be made available by the
EU institutions or seconded by Member States, on the basis of
operational needs;
- Financing of the common costs of ESDP military
operations will continue to be managed and accounted for on the
basis of individual operations. The mechanism, however, allows
for such funding to be managed on the basis of an overall annual
budget of ESDP operations, given that the EU may conduct several
operations at the same time;
- Expenditure attributable to ATHENA will be linked
to a specific operation, except for limited administrative expenditure
such as banking charges, which are explicitly mentioned in an
annex; and
- A proposal to foresee commercial borrowing of
funds at the beginning of an operation which could involve added
costs, has been removed.
13.11 The Minister comments further that this permanent
financing mechanism has only very limited additional financial
implications. The UK will have to pay its share of the small annual
administrative costs. Its share of common costs is set according
to the agreed EU GNP key. This will be approximately 19% in 2003,
but is likely to be reduced to about 15% after enlargement.
13.12 In a letter accompanying his Explanatory Memorandum,
the Minister says that the incoming Presidency may wish to finalise
this agreement early in its term of office. Both the outgoing
and incoming Presidencies are keen to get the financial arrangements
agreed before planning for any new operations begins next year.
The Minister thinks it likely the Council Decision will be adopted
in January.
Conclusion
13.13 We clear the document, but ask the Minister
to write to us again to provide us with more detail than is given
in the unofficial text of the document on how the costs incurred
by recourse to NATO equipment, infrastructure and collective capabilities
are to be determined.
13.14 In his letter, the Minister refers to new
operations that could be planned for next year. We ask him whether
he has any particular new operations in mind.
24 (23537) -; see HC 152-xxxii (2001-02), paragraph
21 (12 June 2002) and HC 152-xxxv (2001-02), paragraph 15 (3 July
2002). Back
25
(24182) -; see HC 63-ix (2002-03), paragraph 12 (22 January 2003). Back
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