European Pressphoto Agency
German Chancellor Angela
Merkel, left, talked to German Finance Minister Wolfgang Schaeuble
during a debate in the lower house of German parliament in Berlin on
Nov. 21.
BRUSSELS—European Union leaders are headed to
Brussels on Thursday for a big showdown over the bloc's spending budget,
in a battle that pits richer against poorer member states, the East of
the continent against the West, and the U.K. against almost everyone
else.
With more than a handful of countries threatening a veto ahead of
Thursday's summit, diplomats sounded pessimistic about prospects for an
agreement on the European Union's spending ceilings for the coming seven
years, in what are usually the thorniest of all EU negotiations.
This time around, disagreements have deepened in the middle of a
continentwide economic downturn, as some countries seek to limit their
contributions while others focus on maintaining funding for the
continent's poorest regions and for projects aimed at enhancing growth.
The Netherlands, Sweden and Austria are among those leading the
charge on behalf of the EU's net contributors, calling for major
reductions in the spending plans for 2014 to 2020 that have been put
forward by bureaucrats in the EU's Brussels headquarters. At the same
time, they have pressed to maintain the rebates they get on their own
national contributions.
The U.K., meanwhile, has led a lone campaign for what British Prime Minister David Cameron has called a "complete freeze" in spending.
"The U.K. has been the real outlier; their demands go way beyond what's on the table," says Fabian Zuleeg of the European Policy Centre, a think-tank in Brussels. "And sooner or later, the rest of the EU could turn against them."
On the other side of the argument is a loose alliance of 15 or so countries, led by Poland, Portugal and Hungary, that are furious that funds earmarked for less-developed regions will be slashed.
"It's an extreme situation. At the moment, there seem to be more vetoes than actual EU countries," said an EU official.
European Council President, Herman Van Rompuy, who will preside over the two-day meeting, has vowed repeatedly to keep heads of state in Brussels through the weekend to avert a collapse of the talks, arguing that a deal is needed urgently to ensure the EU and its institutions continue to function properly.
The Multiannual Financial Framework, as the 2014 to 2020 budget is known, sets out the headline figures allocated to different EU programs and activities, ranging from foreign policy to transport and infrastructure.
Though it arouses passion like no other issue, overall it represents about 1% of EU countries' combined national incomes, or roughly €940 billion ($1.2 trillion) for the entire seven years, according to Mr. Van Rompuy's latest proposal. Without a deal, EU officials argue it becomes impossible to set out medium-term policy priorities and spending.
In a reversal of usual summit protocol, Mr. Van Rompuy is hosting back-to-back bilateral meetings throughout Thursday with all 27 EU leaders, in an effort to bridge the huge gaps before the summit kicks off in the evening. Last week, he issued a compromise budget designed to win over the British and other net contributors by making fresh cuts to spending, though the move instantly sparked an outcry from France, Spain and Italy, which benefit from regional aid and farming subsidies.
This week, French Prime Minister François Hollande promised to ring-fence the revenues from the Common Agricultural Policy, one of the largest slices of the EU budget and one seen by many as most in need of reform.
Concerns among officials about France, Italy and others blocking talks have come to the fore this week, as initial fears that Mr. Cameron would torpedo the summit have appeared to recede with British diplomats signaling they are more open to a compromise. However, governments like Austria and Italy balk at the U.K. being able to hold onto a multibillion-euro rebate and have vowed to seek compensatory measures.
Euro-zone countries such as Germany are particularly keen to avert a protracted round of talks spilling into next year, as they grapple with other pressing issues, such as the Greek debt crisis, Mr. Zuleeg said. "They want to put this to bed as soon as possible," he said.
Should this week's talks fail, EU leaders have until February to reach a deal before Brussels officials run out of time to map out spending and priorities for each policy area until 2020. If no deal is reached next year, an emergency mechanism kicks that would use annual spending figures from 2013 plus inflation—a far costlier arrangement that all EU countries are keen to avoid.
"The U.K. has been the real outlier; their demands go way beyond what's on the table," says Fabian Zuleeg of the European Policy Centre, a think-tank in Brussels. "And sooner or later, the rest of the EU could turn against them."
On the other side of the argument is a loose alliance of 15 or so countries, led by Poland, Portugal and Hungary, that are furious that funds earmarked for less-developed regions will be slashed.
"It's an extreme situation. At the moment, there seem to be more vetoes than actual EU countries," said an EU official.
European Council President, Herman Van Rompuy, who will preside over the two-day meeting, has vowed repeatedly to keep heads of state in Brussels through the weekend to avert a collapse of the talks, arguing that a deal is needed urgently to ensure the EU and its institutions continue to function properly.
The Multiannual Financial Framework, as the 2014 to 2020 budget is known, sets out the headline figures allocated to different EU programs and activities, ranging from foreign policy to transport and infrastructure.
Though it arouses passion like no other issue, overall it represents about 1% of EU countries' combined national incomes, or roughly €940 billion ($1.2 trillion) for the entire seven years, according to Mr. Van Rompuy's latest proposal. Without a deal, EU officials argue it becomes impossible to set out medium-term policy priorities and spending.
In a reversal of usual summit protocol, Mr. Van Rompuy is hosting back-to-back bilateral meetings throughout Thursday with all 27 EU leaders, in an effort to bridge the huge gaps before the summit kicks off in the evening. Last week, he issued a compromise budget designed to win over the British and other net contributors by making fresh cuts to spending, though the move instantly sparked an outcry from France, Spain and Italy, which benefit from regional aid and farming subsidies.
This week, French Prime Minister François Hollande promised to ring-fence the revenues from the Common Agricultural Policy, one of the largest slices of the EU budget and one seen by many as most in need of reform.
Concerns among officials about France, Italy and others blocking talks have come to the fore this week, as initial fears that Mr. Cameron would torpedo the summit have appeared to recede with British diplomats signaling they are more open to a compromise. However, governments like Austria and Italy balk at the U.K. being able to hold onto a multibillion-euro rebate and have vowed to seek compensatory measures.
Euro-zone countries such as Germany are particularly keen to avert a protracted round of talks spilling into next year, as they grapple with other pressing issues, such as the Greek debt crisis, Mr. Zuleeg said. "They want to put this to bed as soon as possible," he said.
Should this week's talks fail, EU leaders have until February to reach a deal before Brussels officials run out of time to map out spending and priorities for each policy area until 2020. If no deal is reached next year, an emergency mechanism kicks that would use annual spending figures from 2013 plus inflation—a far costlier arrangement that all EU countries are keen to avoid.
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