Climate leads trio of unravelling EU deals

(LUXEMBOURG) - European finance ministers failed on Tuesday to agree who will pay what to help developing countries fight global warming, in the biggest of three deals to come unstuck at their meeting.

Poland led opposition to plans for the 27 European Union member states to commit five-to-seven billion euros in short-term annual funding, and some 22 billion euros (33 billion dollars) annually in the longer-term.

Elsewhere, Britain spiked European Commission plans for bloc-wide financial supervision, delaying proposed legislation setting up a European Systemic Risk Board until at least a December summit.

A June accord designed to set up the body -- charged with keeping a lookout for potential financial shocks -- plus three sector-specific watchdogs monitoring banks, insurers and markets, will now be subject to "further political negotiations."

Similarly, Austria and Luxembourg held up a commission-negotiated agreement with Liechtenstein on "tax fraud, evasion and avoidance," which taxation commissioner Laszlo Kovacs said had been made "hostage" to other considerations.

It was supposed to pave the way for a series of deals that would have seen non-EU Switzerland and other European tax havens -- Andorra, Monaco and San Marino -- forced to share depositors' data with EU governments.

"It is a disappointing outcome that we have not been able to reach agreement on climate financing today," said Swedish Finance Minister Anders Borg, whose country holds the EU's rotating presidency.

"There are several very difficult issues that will have to be dealt with," he said, pointing to next week's summit of EU leaders in Brussels at which action on global warming will sit alongside Lisbon Treaty ratification.

"Obviously the political pressure on this issue ... will increase," he added, expressing the hope that opposition from eastern Europe will fade in the run-up to key global United Nations negotiations in Copenhagen in December.

Britain's Chancellor Alistair Darling delayed his flight to try and salvage a compromise agreement, which would have seen the nine rebel countries accept commission figures that would commit the EU to some 100 billion euros each year from 2012 to help meet developing world needs.

"We had a good opportunity today," Darling said. "Unfortunately, a number of countries wanted two things that the majority found unacceptable."

He said Poland and its allies wanted so-called 'fast-start' financing, for the period leading up to the expiry of the existing global Kyoto protocol, to be contributed on a "voluntary basis."

Similarly, he said those countries also wanted to pay less into the European pot over the longer term.

He said, however, that people would not allow their governments to fail to reach agreement, 48 days from the crunch Copenhagen talks. "The issue is too big to let it lie."

The ministers did agree that they will start reducing bloated national public deficits from 2011 "at the latest," although even there it came with the caveat that ongoing economic recovery has to be sustained.

The decision sets a possible timetable for implementing so-called exit strategies to wind down the massive fiscal stimulus plans introduced to help limit the fallout from the global economic crisis.

Twenty EU countries have already been slapped down by Brussels for breaching set annual limits -- three percent of gross domestic product -- with spiralling knock-on debts threatening a political as well as fiscal time-bomb.

Council conclusions on fiscal exit strategy

Council conclusions on strengthening EU financial stability arrangements