News Column

E.U. Budget on Hold After Talks Collapse in Brussels

Nov. 24, 2012

James Kanter; Andrew Higgins

european union, budget, talks

European Union leaders on Friday abandoned talks in Brussels to fix the shape of a seven-year budget of about EUR 1 trillion and they called for a new round of talks early next year.

A summit meeting of European leaders collapsed Friday amid bitter discord over a new budget for the European Union, delivering a further blow to the 27-nation grouping, already struggling to contain a debt crisis, social discontent fueled by rising unemployment and doubts about the long-term viability of the euro currency.

Leaders abandoned efforts to fix the shape of a seven-year budget of about EUR 1 trillion, or $1.3 trillion, and they called for a new round of talks early next year to try to reach an agreement.

Prime Minister David Cameron of Britain, who along with the leaders of the Netherlands, Sweden and several other countries had pushed hard for deep cuts, criticized proposals that did not reduce spending on the European Union's administrative machinery.

Those plans, he told a news conference, showed that "Brussels continues to exist as if in a parallel universe," referring to the headquarters of the Union's institutions, which employ 55,000 people.

Mr. Cameron complained that "more than 200 commission staff earn more than I do," referring to the European Commission, the Union's executive body.

The refusal to trim bureaucratic costs, which amount to about 6 percent of total spending, is "insulting to European taxpayers" at a time when many governments are slashing spending, he said.

The impasse after two days of negotiations was the second failure of its kind this week in Brussels. European finance ministers met all night on Monday without reaching agreement on whether to release the next round of emergency aid to Greece, where unemployment is around 25 percent.

Herman Van Rompuy, the president of the European Council, which represents the leaders of member states, convened the summit meeting and called off the negotiations rather than prolong them through the weekend. He said the budget "has to be balanced and well prepared, not in the mood of improvisation, because we are touching upon jobs, we are touching upon sensitive issues."

"We should be able to bridge existing divergences" in the new year, he said.

Much of the attention at the meeting focused on Mr. Cameron, who had threatened to veto a deal he did not like and had rallied a group of other countries in favor of deep cuts to the seven-year spending plan, called the Multiannual Financial Framework.

Disagreements over where the ax should fall left France and Germany on different sides, disrupting an alliance without which significant deals in Europe rarely happen. France defended payments to farmers, about 40 percent of the current budget, but said there was no rupture with Germany.

"I don't only defend the position of France but the position of a Europe as a whole," President Francois Hollande of France told a news conference.

Negotiations over the budget are held every seven years and tend to push national interests to the fore and submerge talk of European harmony, a cause for which the Norwegian Nobel Committee last month named the European Union as the recipient of the 2012 Nobel Peace Prize.

The budget, which amounts to about EUR 130 billion a year, goes mostly to subsidize farmers and support regional projects in poorer member states, policies that were originally intended to help bind Europe and mute the economic discord that in the past fueled antagonisms that led to bloody wars. But differences in economic performance and priorities between member states are huge, pushing them to embrace starkly divergent agendas in budget talks.

In large measure, this is because what began as an economic bloc comprising six similarly developed market economies in Western Europe is now a 27-member body that includes 10 much poorer East and Central European nations that were formerly part of the Soviet bloc.

As well as divisions between east and west, there is also a gulf between northern countries, especially Germany, and the so-called Club Med states in the south like Greece, which, burdened with huge debts, is struggling to keep its economy afloat and avoid social unrest.

"There are still important differences on a number of key issues, especially the overall size of the budget and the fairness of distributions between member states," Jose Manuel Barroso, the president of the European Commission, said as the meeting broke up.

Source: (C) 2012 International Herald Tribune. via ProQuest Information and Learning Company; All Rights Reserved

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