EU leaders stake out positions over budget

BRUSSELS (AP) ? European leaders were staking out their strong positions as they gathered Thursday for what promises to be a turbulent and lengthy summit on the 7-year budget for the 27-country European Union.

In a battle pitting several wealthy member states against those seeking a bigger aid budget, U.K. Prime Minister David Cameron led the charge for those demanding a reduction in the financial clout ? and political sway ? of the EU's institutions.

As he arrived for a preliminary meeting with Herman Van Rompuy, president of the European Council of the 27 heads of state and government, Cameron said he was not happy with the latest budget proposals.

"These are very important negotiations," Cameron said. "And clearly, at a time when we're making difficult decisions at home over public spending, it would be quite wrong ? it is quite wrong ? for there to be proposals for this increased extra spending in the EU. So we're going to be negotiating very hard for a good deal for Britain's taxpayers and for Europe's taxpayers, and to keep the British rebate."

Facing an ever more vocal Euroskeptic electorate at home, Cameron is under huge pressure to veto any seven-year deal which would exceed the old 2007-2013 ?1 trillion ($1.28 trillion) budget.

The budget primarily funds programs to spur growth in the bloc's less developed regions and farming and amounts to about 1 percent of the EU's gross domestic product.

The European Commission, the EU's executive arm, backs more spending, arguing that cross-border initiatives will help to create the economic growth and jobs that the bloc of a half-billion people needs.

Cameron is the main proponent ? alongside the Netherlands, Sweden and, to a certain extent Germany ? for imposing limits on EU spending. He will demand a real cut in the EU budget, claiming that is the only justifiable outcome at a time when almost every member state has to cut its budget to lower debt.

Those opposing cuts to the budget say that European institutions need the means to implement their policies, which include creating jobs and economic growth, helping development in many southern and eastern nations, and closing the wealth gap between member states.

"Certain countries want to make drastic reductions in the budget. That's a big mistake," said Elio Di Rupo, Belgium's prime minister.

Sixteen of the EU's most financially and economically vulnerable countries have joined forces to oppose cuts to funds earmarked for economic growth and development. These countries include not only traditionally poorer member states, many in Eastern Europe, but also those hit hardest by the financial crisis, like Greece, Portugal and Spain.

Going into the open-ended summit, which might well stretch into Saturday, Van Rompuy made a first compromise proposal that leaned toward Cameron's demands. It proposes a cut of between ?3 billion ($4 billion) and ?24 billion ($31 billion), depending on how the figures are read.

"With less money, we cannot do the same as before," Van Rompuy wrote in the invitation letter he sent to the 27 leaders.

Since each of the 27 member states has veto power over the budget, the outcome is a cliffhanger.

Leaders from Denmark in the north to Spain and Italy down south have already threatened vetoes, sometimes for opposing reasons.

If the summit fails to find a compromise, the issue could spill over into a new meeting next month, or into next year. There is no set deadline for a deal but the closer it gets to 2014, the tougher it will be for a smooth introduction of new programs. If there is no deal up to 2014, there would be a rollover of the 2013 budget plus a 2 percent increase accounting for inflation.

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Don Melvin and Carlo Piovano contributed to this story.

Source: http://news.yahoo.com/eu-leaders-stake-positions-over-budget-104447256--finance.html

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