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European Union

EU members divided by differences over budget

European Council President Herman Van Rompuy has met individually with the 27 EU leaders. Although the meetings went on for hours, they did not achieve any visible progress in reaching a deal on the EU budget.

Brussels, Belgium, August 27; 2012. -- European Union flags are seen in front of the Berlaymont, the headquarter of the European Commission. Foto: Thierry Monasse/DPA

Friedensnobelpreis EU Europäische Union Symbolbild

Van Rompuy made the rounds Thursday evening as if he were a doctor in an overcrowded medical practice. He met individually with each one of the European Union's 27 heads of state and government. Although each leader was allotted 20 minutes with the European council president and European Commission President Jose Manuel Barroso, the discussions over the member states' red lines on the budget drug on longer than expected. Van Rompuy took 12 hours before he was finished with the first round of so-called "confessions."

EU civil servants then began to write a new negotiating paper during the night, one that would do justice to as many of the various interests of the member states as possible. Van Rompuy also has to take into account the interests of the European Parliament, because the parliamentarians will ultimately vote on the seven-year budget.

Merkel: Second summit possible

During the hours-long wait to meet with Van Rompuy, the 27 national leaders met with each other for bilateral talks in search of potential allies. According to French delegates, German Chancellor Angela Merkel expressed understanding for French President Francois Hollande's insistence on high agricultural subsidies for France's farmers.

French President Francois Hollande (L) and German Chancellor Angela Merkel leave after a bilateral meeting at the EU council headquarters, ahead of a European Union leaders summit discussing the European Union's long-term budget, in Brussels November 22, 2012. European Union negotiators believe they are close to securing British and German backing for a deal on nearly a trillion euros of spending over the next seven years, but last minute concessions may be needed to secure French and Polish support. REUTERS/Bertrand Langlois/Pool (BELGIUM - Tags: POLITICS)

Germany reportedly expressed understanding for France's position on farm subsidies

Hundreds of journalists, who stuck it out in the summit building throughout the evening, did not hear anything official regarding the state of the negotiations. Merkel said at the beginning of the summit that compromise would be key.

"Everyone will certainly have to demonstrate their ability to move toward compromise," the German chancellor said. "We all know each other well."

At the same time, Merkel made it clear that she did not necessarily anticipate a breakthrough at the summit.

"I'm saying we may need one more stage," the chancellor said. "That's something we'll be able to judge tomorrow."

Seven years ago, the EU heads of state and government needed three summit meetings in order to ultimately reach a deal on the budget.

Contributors vs. Recipients

The amount of funds that the EU should collect from and then pay out to member states remains a subject of debate. Net recipients such as Estonia and Poland have pleaded for the EU Commission's draft budget to be implemented, which foresees 1.09 trillion euros for the period from 2014-2020.

But the net contributors to the EU budget, or those countries that pay in more than they get out, want to cut spending. While Great Britain and Sweden are demanding deep cuts to the tune of 200 billion euros, Germany would be satisfied with cuts of 100 billion euros.

Britain's Prime Minister David Cameron arrives at the EU council headquarters for a European Union leaders summit discussing the European Union's long-term budget in Brussels November 22, 2012. EU heads of state and governments will need to agree on a first-ever cut in the bloc's long-term spending plans if they are to clinch a deal at the summit starting on Thursday, with the drive for austerity likely to trump all other concerns. REUTERS/Yves Herman (BELGIUM - Tags: POLITICS BUSINESS)

Cameron's veto threat has isolated him from some EU leaders

Some states are calling for the funds in the future to be invested in growth, research and education programs instead of being paid out as subsidies. But France, Spain and other states with strong agricultural sectors reject this proposed change of course.

Speculation of budget without Britain

The visions of the various member states are still far apart, according to Luxembourg Prime Minister Jean-Claude Juncker. Great Britain has to be convinced, Juncker said, while adding that he doesn't know how. When asked by a reporter whether not the UK was still in the European boat, Juncker answered curtly that "the British can swim." In the current heated debate over the EU budget, the British can disembark from the boat as far as Luxembourg's prime minister is concerned.

In the run-up to the summit, there was already speculation about a multi-year budget without Great Britain. Prime Minister David Cameron said many times in Brussels that he would stay tough and get a good deal for the British taxpayer. But above all, Cameron has said he wants to defend Britain's discount on its EU membership fees.

Reciprocal threats

In addition to the British government, net contributor Denmark has also considered using its veto to stop the budget. And on the side of the net recipients, Latvian Prime Minister Valdis Dombrovskis has threatened to vote "no" on any budget that cuts regional aid to his country. Romania has supported Dombrovskis' move.

In the budget negotiations, all 27 member states - regardless of their size and wealth - have the same weight in the unanimous decision-making process. Austrian Prime Minister Werner Faymann has rejected the veto threats. It's a card that is usually played at the end of the negotiation poker, he said.

"It's the job of a head of government to forcefully represent his country's interests," Faymann said. "But we also have to know that at the end, we all win or lose together."

Greece's Prime Minister Antonis Samaras arrives at the EU council headquarters for an European Union leaders summit discussing the European Union's long-term budget in Brussels November 22, 2012. EU heads of state and governments will need to agree a first-ever cut in the bloc's long-term spending plans if they are to clinch a deal at a summit starting on Thursday, with the drive for austerity likely to trump all other concerns. REUTERS/Francois Lenoir (BELGIUM - Tags: POLITICS BUSINESS)

Samaras called on the IMF and the Eurogroup to act on Greece's next bailout tranche

The Austrian prime minister acted calmly, saying he could stay until Monday if need be. He went on to say that the EU leaders may have to meet for a special summit in January. That would be the "second stage" that Angela Merkel had discussed.

Greek bailout not discussed

The debt crisis and bailout for Greece have so far not played a role at the summit. Greek Prime Minister Antonis Samaras called on the International Monetary Fund (IMF) and the Eurogroup to act.

"We have fulfilled our responsibilities," Samaras said. "Now it's the turn of our European partners and the International Monetary Fund to deliver their part."

The bailout fund for indebted eurozone states is not financed by the EU's budget, which is currently being hashed out in Brussels. The 14 solvent eurozone states guarantee and pay separately into the temporary European Financial Stability Facility (EFSF) and the permanent European Stability Mechanism (ESM).

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