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EU's trillion euro budget summit ends in failure

23 November 2012, 21:19 CET
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EU's trillion euro budget summit ends in failure

Herman Van Rompuy - Photo EU Council

(BRUSSELS) - Talks on the European Union's trillion euro budget ended in deadlock Friday when leaders of the 27-nation bloc failed to overcome seemingly irreconcilable differences on spending.

EU President Herman Van Rompuy insisted however that progress had been made in the two days of bitter bargaining. He forecast that a deal would be made when leaders meet again next year.

Tensions between rich and poor states over funding for economic development and Britain's strident demands for cuts in the mammoth budget -- covering seven years from 2014 to 2020 -- had set the summit on a rocky course from the start.

Britain was cast as the chief spoiler, with Prime Minister David Cameron arriving with a threat to wield his veto unless spending was frozen in real terms. He argued that in times of economic crisis, the EU too must make deep cuts.

But Cameron said as leaders went home without a deal that his country was not alone in seeking to reduce EU spending.

"The deal on the table was not one I was prepared to accept, nor were a number of other countries," he said of talks that a former European premier described as "like a Turkish bazaar".

The last time the EU had to agree on seven-year budget negotiations was in 2005, when it took six months and a failed summit during which Britain deployed its veto.

Nearly a year after angering his European counterparts by vetoing a pact to resolve the eurozone crisis, Cameron irritated many by demanding cuts to perks enjoyed by so-called "eurocrats" -- the well-paid EU civil servants frequently lampooned by the British press.

He failed to get them.

"The (European) Commission did not offer a single euro in savings (on perks) and I just don't think that was good enough," he said.

British, Swedes, Dutch made 'virulent' demands for cuts

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An EU diplomat said the main obstacle at the summit was Cameron's demand for reductions in the planned trillion dollar budget, with Sweden and The Netherlands the other "virulent" countries seeking cuts.

Cameron had vowed to bring down the budget from a proposed 1.047 trillion euros ($1.347 trillion) to 886 billion euros.

Van Rompuy submitted new proposals Friday to bring the budget to 972 billion euros, or just over one percent of the total economic output of the union that is home to 500 million people.

Those proposals aimed to meet demands to maintain so-called "cohesion" funds to help poorer nations and regions catch up with richer ones, as well as spending on the Common Agricultural Policy, the farm subsidy programme cherished by France that is the budget's biggest single item.

But that was not enough, and EU leaders threw in the towel.

As recriminations began to fly, a British source criticised a lack of preparation by Van Rompuy for the summit, saying it made negotiations more difficult.

French President Francois Hollande took a pop at Cameron, saying he had come to the summit with a "set priority" to protect the British rebate.

"I too could say that I want my discount," he said, adding that Britain was a smaller net contributor to the EU budget than France, which does not claim a rebate.

Britain has claimed that right since then prime minister Margaret Thatcher obtained one in 1984 on the grounds that London was paying too much into the bloc's coffers.

Chancellor Angela Merkel of Germany, which forks out by far the most money to keep the EU running, had been sceptical even before arriving in Brussels that a deal might be reached at the summit and played down the importance of failure.

She said Friday she was "satisfied" at the progress made and confident a deal would eventually be achieved.

Remarks by President Herman Van Rompuy following the European Council


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