Provided the French vote ‘Yes’ in the forthcoming referendum on 29 May, the European Council meeting in June this year will be set to reach a budgetary deal for 2007-13. However, as economic stagnation in the Euro-area leads the richest EU countries to increasingly see the way out of their economic problems in reducing their contribution to the EU budget, Spain runs the risk of bearing on its own the burden of enlargement to the East. With agricultural expenditure having been shielded from substantial cuts by the Franco-German agreement of October 2002, most of the money currently on the negotiating pertains to the Cohesion and Structural Funds from which Spain benefits so much. Because Spain risks becoming a net contributor to the budget before having reached real convergence with the EU-15, the negotiations on the next financial perspectives (2007-13) can be considered the most crucial of all those in which Spain has been involved so far. Why?
1. What is at Stake
The European Commission’s proposal currently on the negotiating table concerning the distribution of Cohesion and Structural Funds implies that, over the 2007-13 period, Spain will receive an estimated €23.4 billion less compared with 2000-06.
Of particular concern are the €12.4 billion in Cohesion Funds which Spain will cease to receive due to the statistical effect of enlargement, which has pushed Spain’s per capita GDP over the 90% threshold qualification. In an EU of 15 members, Spain’s average income (2003) would be at 87% of the average, thus still qualifying it for Cohesion Funds. However, because of the statistical effect of enlargement, the same per capita income amounts to 95% of the EU-25 average (2003), thereby losing its entitlement. Since the Treaty on the European Union (TEU) does not envisage any transitional period or phasing-out mechanism for this fund, it may well be lost in its entirety.
Similarly, of the 12 regions which have qualified for structural aid during 2000-06, half of them (Asturias, Castilla-León, Castilla-La Mancha, Murcia, Ceuta and Melilla) would cease qualifying for regional funds in an EU of 25 members because of a mere statistical effect; three (Galicia, Andalucía and Extremadura) would remain below the 75% ceiling even in an enlarged EU-25 and another three (Cantabria, Valencia and Canarias) would cease qualifying because of ‘natural’ convergence, having already reached the 75% threshold at the EU-15 level.
Therefore, even counting on a phasing-out fund of 40% of the quantities received during 2000-06 for regions that have reached ‘natural’ convergence and 66% for those that have reached convergence by the statistical effects of enlargement, Spain would cease to receive a further €8.6 billion due to ‘natural’ convergence and a further €2.4 billion due to the statistical effect.
Figure 1. Estimated losses in payments from the EU for the period 2007-13 (figures in € billion)
Source: S. Sosvilla and J.A. Herce, La política de cohesión europea y la economía española: evaluación y prospectiva’, Real Instituto Elcano, Working Paper 52/2004, available at ARI 88/2002
 Figures from S. Sosvilla and J.A. Herce, ‘La política de cohesión europea y la economía española: evaluación y prospectiva’, Real Instituto Elcano, Documento de Trabajo 52/2004, available at http://www.es-ue.org/).
 Figures from Fundación de Estudios Financieros (FEF) (2005), ‘España y las nuevas perspectivas financieras de la Unión Europea 2007-2013: Nuevos condicionantes, nuevos objetivos, nuevas estrategias’, available at http://www.fef.es/z_contenido/p11_fef.zip.
 Please note, however, that the State Secretary for Economic Affairs has unofficially circulated figures which estimate a net balance in 2007-13 that is much lower for Spain. The figures are (in € millions): 2007, 331; 2008, 47; 2009, -385; 2010, -943; 2011, -1,528; 2012, -1,682; and 2013, -1,966). Figures are presumably based on assumptions on payments rather than appropriations and a 1% expenditure ceiling.
 ‘España comunica al Ecofin que el proyecto presupuestario de la UE es inaceptable’, El Pais, 13/IV/2005, p.60.
 Estimates by FEF (2005) coincide in setting at €42 billion the net loss for Spain of the change from 2000-06 to 2007-13 under the current Commission’s proposals (the breakdown is basically similar: €25 billion less in EU expenditure in Spain and €17 billion more in increased contributions).
 ‘Zapatero admite que una caída brusca de ayudas de la UE complicaría sus objetivos económicos’, El Mundo, 22/IV/2005.
 Figures from Fundación de Estudios Financieros (FEF) (2005), Table 1.
Spain’s contribution to the budget is split in the following way: of the €10.1 billion which Spain will contribute to the EU budget in 2005, the fourth item (GNI based) amounts to €6.58 billion (65%), whereas VAT-based resources total €1.91 billion and traditional own resources €1.07 billion. Source: MINECO.
 Figures from FEF (2005), op. cit., Table 1. Note however that of the four Cohesion countries, Spain is the country that receives the least in relative terms. Greece receives 2.39% of its GDP in EU budgetary transfers, whereas Portugal receives 2.14 and Ireland 1.5%.
 Sosvilla and Herce, op. cit.; FEF (2005), op.cit., Tables 1, 2, 3.
C. Martín and J. Turrión (2003), ‘El impacto de la ampliación de la Unión Europea en el comercio y en los flujos migratorios y de inversión directa de España’, Documentos de Trabajo de la Academia Europea de Ciencias, Delegación Española, p. 31. See also C. Martín, J.A. Herce, S. Sosvilla, J.A. Velázquez (2003), ‘La ampliación de la UE. Efectos sobre la economía de española’, Colección Estudios Económicos, núm. 27, Servicio de Estudios de La Caixa.
 See El País, 16/III/2005; study by J. Gual of IESE cited in El País, 25/IV/2005 (‘El 15% de la industria está amenazada de traslado al Este’, p.79).
 J.I. Torreblanca, ‘Out-of-pocket Spaniards May Turn Their Backs to Europe’, European Voice, 14-20 April, vol. 11, nr. 14, p. 8.
Eurostat News Release, 13/2002, 29/I/2002, ‘Regional per Capita GDP in the EU and Candidate Countries in 1999’.
 European Commission IP/05/389 of 6 April 2005. €264 billion (78%) will go to Convergence (<75%); €57.9 billion (17.1%) to competitiveness and employment; and €14.3 billion (4.2%) to cross-border cooperation. See the earlier proposal in European Commission, IP/04/925 of 15 July 2004, ‘Construir nuestro futuro común: retos políticos y medios presupuestarios en la Unión ampliada’, COM (2004) 101f, 10/II/2004.
 C. Serrano, B. Montoro and E. Viguera, ‘Perspectivas financieras 2007-2013: Las nuevas prioridades de la Unión Europea y sus implicaciones en la política regional’, Instituto de Estudios Europeos – CEU, Observatorio de Economía Europea, Documento de Trabajo, 2/2004.
 Figures from FEF (2005), op. cit., Table 9.
 FEF (2005), op. cit., Table 9, estimates that the cost of Commission’s proposals to Spain (€-15.9 billion when comparing payments from the EU budget in the two periods) would add up to 0.63% of Spain’s GDP. MINECO estimates that the combined effects of increased contributions and decreased payments would represent a loss of operating balance equivalent to 0.83% of Spain’s GDP when comparing the 2000-06 and 2007-13 financial perspectives. S. Sosvilla and J.A. Herce (2004) estimate losses to be between 0.40 and 0.56% of Spain’s GDP (depending on the scenario, mild or harsh); Zubiri (2004) estimates the cost of the Commission’s proposals at between 0.63% and 0.71% depending on the year (€3.5 billion in 2007 and €3.99 billion in 2013).
 See C. Blankart and C. Kirchner (2004), ‘Deadlock of the EU Budget’, in C. Blankart and D. Mueller (eds), ‘A Constitution for the European Union’, MIT Press, Cambridge, Mass., pp.109-138.
 An important element in determining access to EU funds is, unexpectedly, the country’s size, rather than its per capita level. Contrary to common interpretations that Spain gets the most, data show that small countries tend to receive more than large countries and to pay more than large countries. See the study by C. Martin and I. Sanz, ‘Las consecuencias de la ampliación para la política regional europea’, Academia Europea de las Artes y las Ciencias, Delegación Española, p.21.
 See Phedon Nicolaides, ‘National “Red Lines” Undermine European Budgetary Reform’, EIPASCOPE, 2005/1.
 Gervasio Cordero has estimated the cost for Spain of the Dutch Proposals for a 1% budgetary ceiling to be of €37.8 billion. This would be the difference between the Structural and Cohesion money received between 2000-06 (€57 billion at 1999 prices) and what the Dutch proposal would allocate to Spain (€19.1 billion at 1999 prices) for the period 2007-13. See G. Cordero, ‘El futuro de la política regional europea después de la próxima ampliación: el estado del debate’, Mimeo.
 Agence Europe, 07/IX/2004.
 ‘The Battle of the Budget’, Economist.com, 3/III/2005; Newropeans Magazine, ‘EU budget and the UK rebate: How to cut the cake fairly’, by Elodie Boussonnière, 4IV/2005.
 European Commission, ‘Financing the European Union’, COM (2004) 505 final/2, vol. I, 6/IX/2004, EU Observer, 14/VII/2004.
 Figures from Finance Minister, Mr. Solbes, speaking at the Spanish Senate on 24/XI/2004.
See the harsh statement issued by President Prodi after having received the letter of the six contributors asking for the capping of the EU budget at 1%: ‘Miracles are not my speciality… I wonder whether this is a reflection of the kind of level of responsibility that these member states actually want that the Union of 25 achieves’.
 In terms of operating expenditures, in 1996, the EU was at 1.14% of its GDP and today it is placed at 0.98% (Agence Europe, 07/IX/2004). See also European Parliament 1999-2004, Working Document No. 8 DT 516940EN.doc, ‘Appraisal of the financial perspective 1988-2006’, Report 9/XII/2003, Figure X.
 ‘Budgeting for an enlarged Union’, European Parliament, Background Information, 6/II/2004, Annex: ‘Increases in government and EU expenditure 1996-2002’.
 Guillaume Durand, ‘Putting EU Finances in Perspective’, The European Policy Centre, Commentary / 2004.
 Iain Begg, ‘The EU Budget: Common Future or Stuck in the Past’, Centre for European Reform. Briefing Note, 1004.
 European Commission, ‘The Concept and Measure of the Budgetary Balance’, 7/X/1998, Annex 3.
Another revealing figure, the EU budget for 2004 stood at €100 billion, but Spain’s trade deficit with the world was €51.84 billion, EPS 27/04/2005, p.58.
‘El Consejo del BNL acepta la oferta del BBVA’, El País, 08/IV/2005.
‘Telefonica se resigna a perder licencias de UMTS que le costaron 6.500 millones’, El País, 16/VIII/2004, p.59.
 ‘Berlín y Paris aceptan que se compense a España por la pérdida de fondos europeos’, El País, 1/II/2005, p.54; ‘La UE asume la exigencia de España de recibir el Fondo de Cohesión dos años más’, El País, 23/IV/2005, p. 59; ‘Moratinos aprecia cambio conceptual respecto al problema español’, EFE, 25/IV/2005; ‘Los países ricos se oponen a que la UE amplíe el fondo de cohesión para España’, El País, 26/VIV/2005, p.52; La UE mantendrá la prórroga del Fondo de Cohesión’, El País, 27/IV/2005.
 As Daly Grybauskaite, EU Budget Commissioner, has reminded, in 1999 the late agreement on the 2000-06 perspectives meant that most of the EU’s aid in the form of structural funds was received by member states only at the end of 2002 instead of in 2000 (EUobserver.com, 7/IV/2005).
A. Moberg (2002), ‘The Nice Treaty and Voting Rules in the Council’, Journal of Common Market Studies, vol. 40, nr. 2, pp.259-282.