Breakdown in EU budget talks

Bitter discussions between government ministers and the European Parliament over next year's EU budget broke down on Thursday evening (11 November), placing a question mark over the bloc's smooth operation in 2011.

The Belgian EU presidency decided to halt the negotiations when it became clear a group of member states were unwilling to concede to MEP demands for a more formal role in separate upcoming talks on the future shape of the EU's next multi-annual budget, together with discussion on EU self-funding mechanisms.

Earlier parliamentary negotiators had signaled they would step away from their previous demand for a 5.9 percent budget increase in 2011, instead settling for the more limited 2.9 percent rise supported by member states if given a concession in return.

Diplomats will now attempt to cobble together a last-minute agreement on Monday. Failure will see this year's budget rolled into 2011 on a month-by-month basis while the European Commission comes forward with a new proposal.

"We need to avoid inward looking solutions. The stance of the Council [representing member states] today does not seem to reflect this view," European Parliament President Jerzy Buzek said immediately after the breakdown. "It does not seem to grasp the fact that financial markets trust an EU-wide solution more than 27 differing ones."

"The European Parliament expects that the Council will show openness as the Parliament has done," he continued. "At stake, if the Council refuses, are EU funded projects, which are growth oriented."

National austerity measures have served to politicise the debate, with UK Prime Minister David Cameron last week persuading 12 other EU leaders to sign up to a maximum 2.9 percent rise next year. London had earlier called for no rise at all, conscious that Tory eurosceptics were likely to pounce on greater transfers to Europe as unacceptable when departmental budgets were being slashed back home.

Britain's Justine Greening, a minister in London's Treasury Department, said member states were giving parliament time to "reflect", adding that the 2.9 percent increase remained available if MEPs removed the strings attached.

Sources close to the discussions said the UK, Sweden, Denmark the Netherlands and Latvia had collaborated to end Belgian EU presidency efforts to broker a compromise, reports AFP. Softer support for the tough member-state position also came from France, Germany, Austria and Finland.

The commission reportedly tabled a proposal to give parliament a greater say in the planning of the EU's multi-annual spending period but member states rejected it. European heavyweights such as German Chancellor Angela Merkel have also recently spoken out against plans for an EU tax.

The acrimonious talks are the first to take place under the EU's Lisbon Treaty, new rules that are supposed to improve the efficiency of budget negotiations by having only one reading.

There are also signs that the protracted wrangling is causing unhappiness in several member states that support greater EU budgets in general, due to their net recipient status.

"The discussions which should be technocratic have become highly politicised," a Polish official told EUobserver this week. "If we roll over the 2010 budget there will be less room for everything. We also have new policies for 2011, including the Galileo satellite system, the external action service and a major nuclear fusion project."

"We are worried by the rise in intergovernmentalism," the official said more generally. "We saw at the last European Council that its president, Herman Van Rompuy, didn't act as an honest broker. He served the interest of some member states. He's trying to re-establish himself after a fall in standing."

[Source: By Andrew Willis, Eubserver, Brussels, 12Nov10]

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