Yves Herman/Reuters
An illuminated balloon marking the Irish presidency of the Council of the European Union is seen in the atrium of the EU Council building during an European Union leaders summit meeting to discuss the European Union's long-term budget in Brussels Friday. European Union leaders overcame what appeared to be unsalvageable differences and on Friday approved a 960 billion euro ($1.3 trillion), seven-year budget for the 27-member block.

EU leaders approve budget, and everyone wins - at least politically

Europe's leaders, in agreeing to a seven-year, 960 billion euro budget today for the EU, can all claim political victory for their constituents, but the practical implications are modest.

After a vigorous all-nighter of horse-trading, European Union leaders in Brussels overcame what appeared to be unsalvageable differences and on Friday approved a 960 billion euro ($1.3 trillion), seven-year budget for the 27-member block.

But while the new 2014-2020 budget allows the leaders involved to claim victory to their constituents back home, the agreement's significance is mostly political, rather than practical – and could still be subject to a veto from the EU Parliament.

The core divide at the summit was a familiar one, once again pitting the French-led block, backed by Italy and Spain, that wanted to secure funds to spur economic growth, against the British-led block, backed by richer and smaller northern European nations, that demanded more austerity and shrinking of what they see as an giant EU bureaucracy.

The ultimate broker was – not surprisingly – Germany's Angela Merkel, who supported cuts, but prioritized clinching a deal in order to avoid exposing the EU as a dysfunctional block unable to agree on common policies: a scenario that could have undermined its credibility when it comes to economic recovery policies.

Ultimately, all parties agreed on a 45 billion euro ($60 billion) reduction from the current budget cycle, and a symbolic 12 billion euro ($16 billion) less than a November proposal that Britain and its allies rejected, raising worries that a deal was not forthcoming. The cuts will come mostly from energy and transport projects.

"Deal done!" EU President Herman Van Rompuy said in Twitter. "We simply could not ignore the extremely difficult economic realities across Europe, so it had to be a leaner budget," he said in a press conference.

Everyone wins

The apparently irreconcilable positions among Europe's leaders are driven by domestic politics and opposing visions of what the EU should be, rather than actual number-crunching. Those contrasting visions are not easily smoothed over, as the budget must be unanimously approved by country leaders.

In addition, the EU Parliament has veto power and it has threatened to still block approval if the cuts are too big.

But EU President Herman Van Rompuy, who is responsible for proposing compromises to bridge the budget differences, designed a budget that allowed all major participants to claim victory with their constituencies.

British Prime Minister David Cameron, who threatened multiple times to veto the budget in order to placate growing euroskepticism from his coalition partners, imposed the symbolic austerity. France's Francois Holland can claim he blocked an overly thrifty budget to show his citizens that he would defend French interests.

Ultimately, it appears that every nation can claim victory. The UK can claim the EU yielded to its demands; Denmark will get the bigger rebate it asked for; Germany will reaffirm its leadership role, and France will not lose its agriculture subsidies.

Italy and Spain secured little change to their net receipts, though Spain will be the main beneficiary of a 6 billion euro fund aimed at cutting youth unemployment.

Much ado about nothing?

But for all the political significance, the practical implications of the agreement are limited, as the EU budget is not designed to finance national expenditure. Every country has to contribute to the budget, depending on numerous factors, especially the size of its population and economy. But every country also received rebates toward specific policies, the biggest being agricultural subsidies, rural development, and infrastructure projects, that mostly benefit France, Poland, Spain, Italy, and Eastern Europe.

The budget is designed to bridge the economic and development differences in Europe. Rich northern European countries, and France, are net contributors, while southern and eastern European countries are net receivers. The logic is that rich countries ultimately benefit from having a more balanced EU.

No member country actually depends on the EU budget, though. The headline EU budget is equivalent to around 1 percent of the EU's gross domestic product. The net benefit of each is minute, as a share of overall government expenditure. And the 12 billion in additional cuts, equivalent to less than 2 billion annually, are insignificant.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to EU leaders approve budget, and everyone wins - at least politically
Read this article in
QR Code to Subscription page
Start your subscription today