EU’s haves and have-nots fight over budget

BRUSSELS, Belgium – The European Union faces a midnight deadline Tuesday to overcome a row between the bloc’s have and have-not nations preventing governments from agreeing a budget for this year and next.

Budget ministers from the 27 states gather from 1800 GMT to take a fresh stab on spending for 2012 and 2013 after a first round of talks broke down last week when austerity-minded states — the likes of Britain, Finland and the Netherlands — refused funds for Europe’s needy.

The collapse of the talks Friday dented any hope of a swift and easy deal at a key summit next week on the even more hotly disputed issue of the bloc’s next seven-year budget, for 2014-2020.

Long expected to be the scene of a battle between the EU’s older wealthier states and the poorer members on its southern and eastern fringes, the November 22-23 summit is increasingly likely to show a bitterly divided Europe.

And on Tuesday, battle-lines took shape as Britain’s premier David Cameron, self-styled leader of the toughest-talking cost-cutters in the EU camp, flew to the Netherlands and Italy to rustle up support from leaders Mark Rutte and 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 near 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 at best a 100-billion cut, at worst a freeze, on the European Commission’s proposed 1.03-trillion budget for 2014-20, up 5.0 percent from the previous one.

They include Austria, Britain, Denmark, France, Finland, Germany, Netherlands amd Sweden.

Net contributors Belgium, Luxembourg, 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.

Last Friday, states were to approve a budget for 2013 but instead snagged straight off on an 8.9-billion-euro ($11.3-billion) hole in this year’s spending, threatening the future of a wide range of social programmes including the Erasmus student exchange scheme.

The projected spending also included 670 million euros set aside to compensate Italian earthquake victims.

For 2013, the European Commission and European Parliament are seeking a 6.8-percent increase — or nine billion euros — to 138 billion euros to bolster growth and jobs in the slowing economy.

But net contributors want a sharp reduction to match the spending cuts and austerity policies of most European capitals.

The Commission, the EU’s executive arm, argues this will seriously undercut any chance for economic growth, worsening the very problems such countries say must be fixed through more belt-tightening.

With the Erasmus student exchange programme also at stake, some 100 famous Europeans, from footballers to philosophers, last week urged the EU to reach a deal.

“The economic crisis has hit Europe’s youth very hard,” said a letter from figures including former international footballer Lilian Thuram, Spanish filmmaker Pedro Almodovar and British playwright David Hare.

“One in five young Europeans — more than five million — are without a job. This cannot continue. We cannot afford a lost generation,” it said.

If there is no agreement on the 2013 budget, the EU would base its spending for next year on the 2012 programme, rolled over on a monthly basis. –Claire Rosemberg, Agence France-Presse