Budget talks collapse in new setback to EU
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BRUSSELS -- A summit meeting of European leaders collapsed Friday amid bitter discord over a new budget for the European Union, delivering a further blow to a 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 set the shape of a trillion-euro long-term budget and called for a new round of talks early next year to try to reach a deal.
British Prime Minister David Cameron -- who along with the leaders of the Netherlands, Sweden and several other countries had pushed hard for deep cuts -- blasted proposals that left spending on the union's administrative machinery intact. This, he said at a news conference, showed that "Brussels continues to exist as if in a parallel universe," referring to the headquarters for the union's institutions.
The refusal to trim bureaucratic costs, which amount to about 6 percent of total spending, is "insulting to European taxpayers" when many governments are slashing spending, Mr. Cameron said.
The impasse after two days of negotiations was the second failure this week in Brussels. European finance ministers met all night Monday without reaching accord on whether to release the next emergency aid round to Greece, where unemployment is around 25 percent.
European Council president Herman Van Rompuy, who convened the summit meeting and called off the negotiations rather than prolonging them through the weekend, said the EU's 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 rallied a group of other nations in favor of deep cuts to the Multiannual Financial Framework, a seven-year spending plan. Disagreements over where the ax should fall left France and Germany on different sides, disrupting a Franco-German tandem without which significant deals in Europe rarely happen.
France defended payments to farmers, which make up around 40 percent of the current budget, but insisted that there was no rupture with Germany. "I don't only defend the position of France, but the position of Europe as a whole," President Francois Hollande said at a news conference.
The negotiating marathon over the budget is held every seven years. The focus on hard cash tends to push national interests to the fore and swamp talk of European harmony, a cause for which the Norwegian Nobel Committee last month named the EU as the Nobel Peace Prize recipient.
The budget, which amounts to about $168 billion per year, goes mostly to subsidize farmers and support regional projects in poorer member states, policies originally intended to help bind Europe together and mute economic discord that in the past fueled antagonisms that led to bloody wars. But differences in economic performance and in 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 Western European market economies is now a 27-member body that includes 10 much poorer Eastern and Central European nations that were part of the socialist bloc.
As well as divisions between east and west, there is also a big gulf between northern countries, especially Germany, and so-called Club Med states in the south such as 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," European Commission president Jose Manuel Barroso said as the summit meeting broke up Friday afternoon.
First Published November 24, 2012 12:00 am