Thu, Nov 15, 2012 - Page 7 News List

EU budget in limbo as talks collapse

NORTH-SOUTH DIVIDE:Negotiations over next year’s budget broke down as the ‘have’ states championed austerity and the ‘have nots’ backed equal distribution


Police clash with a demonstrator who tried to prevent the departure of buses from the parking lot of Madrid Bus Co during a general strike yesterday in Madrid.

Photo: AFP

Tough talks on next year’s EU budget collapsed on Tuesday when the European Parliament refused to sit at the negotiating table with governments refusing to pay this year’s bills.

At the center of the row was 9 billion euros (US$11 billion) of unpaid bills this year covering a range of worthwhile causes — Europe’s Erasmus student exchange program, research funds, humanitarian aid and cash for rural development.

The dispute between “have” and “have-not” states also bodes badly for the fate of a key summit days away on the bloc’s even more hotly contested longer-term budget from 2014 to 2020.

“If they can’t agree to pay the bills, what can they agree to?” said European Member of Parliament Hannes Swoboda, who heads the parliament’s socialist group.

The one exception was an agreement to dish out 670 million euros set aside to compensate Italian earthquake victims.

In a statement issued three hours before EU budget ministers were to go into talks on next year’s budget, the parliament refused to attend on grounds that EU nations were depriving Europe’s needy of key funds and failing to honor commitments.

“These funds are needed for the European Union to respect its legal obligations, that is to pay for bills incurred for goods, works and services delivered,” European Parliament President Martin Schulz said.

The EU executive, the European Commission, will now have to draw up a new budget proposal for next year and seek an agreement on it by year’s end.

Tuesday’s quarrel sets the scene for the summit next week on Thursday and Friday, likely to turn into an ugly showdown presenting a bitterly divided Europe, torn between older wealthier states and poorer members on its southern and eastern fringe.

On Tuesday, battle lines took shape as British Prime Minister David Cameron, self-styled leader of the toughest-talking cost cutters in the EU, flew to the Netherlands and Italy to rustle up support from Dutch Prime Minister Mark Rutte and Italian Prime Minister Mario Monti ahead of the summit.

Meanwhile, in Brussels, 15 heads of state and government from the opposite camp flew in to set a pre-summit agenda of what is termed the “Friends of Cohesion” group.

The EU’s Cohesion funds, the second-biggest item on the bloc’s budget after the Common Agricultural Policy, aim to help Europe’s poorer nations catch up with others, economically and socially.

Members of the Friends of Cohesion are net recipients of the EU’s nearly 1 trillion euro budget.

Chaired by Poland and Portugal, the group includes Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Romania, Slovakia, Slovenia and — most recently — Spain.

Their opponents, eight of the 11 net contributors, want a 100 billion euro cut on the European Commission’s proposed 1.03 trillion budget for 2014 to 2020, which is a 5 percent reduction from the current one.

They argue that when many member nations are being forced to make cutbacks, the EU budget should also be cut back in real terms. The group includes Austria, Britain, Denmark, France, Finland, Germany, Netherlands and Sweden. At worst, they appear ready to settle for a real-term freeze in spending.

Net contributors Belgium, Luxembourg and Italy are refusing to take sides, as is Ireland, which is a net recipient, but is remaining aloof as it takes over the EU presidency in January.

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