Budget showdown? Forget D.C., Brussels girds for bruising battle

Europe's heads of state are set to meet in Brussels during the next two days to determine a new EU budget, with richer nations pushing for budget cuts that poorer countries oppose.

Bertrand Langlois/Reuters
Polish Prime Minister Donald Tusk (second from right) and French President Francois Hollande (left) attend a bilateral meeting Wednesday on the sidelines of an EU summit in Brussels. European Union leaders begin two days of talks on a long-term budget on Thursday, with efforts to refocus spending on growth likely to be thwarted by demands for farm subsidies as pressure to reach a deal grows.

European Union leaders drew hard lines Thursday ahead of a bracing fight over EU spending for the next seven years that reflects deep divisions over the role of their union.

On one side, newer – and generally poorer – members see Europe as a club that is only as strong as its weakest member. Led by Poland, they argue that Europe means nothing if the budget isn't used to bridge the wealth gap and help restart growth.

On the other side, countries led by Britain are insisting that the EU has to make the same drastic cuts that member nations themselves are making in their national budgets as they weather the continent's economic and debt crises. They want tens of billions of euros slashed off the €1.03 trillion ($1.35 trillion) originally asked for by the European Commission, the EU's executive arm.

Both sides are threatening to walk away from the table – again – if they don't get what they want. The first summit to negotiate a budget collapsed in November.

"We have to make savings, but without weakening the economy," said French President Francois Hollande on his way into the summit in Brussels. "If Europe wants an agreement at all costs and abandons its common policies, I do not agree."

While France's economy is the EU's second largest, it supports poorer countries and is a strong advocate for wealth-sharing. France, too, receives a significant amount of money in agricultural subsidies.

Most of the EU leaders came in with a national agenda in mind, and Czech Prime Minister Petr Necas said the proposals he had seen so far were "unfair." Since any deal needs unanimity, Necas threatened to use his veto.

Britain was also threatening to tank the talks.

"The European Union should not be immune from the sorts of pressures that we've had to reduce spending, find efficiencies and make sure that we spend money wisely, that we're all having to do right across Europe," said Prime Minister David Cameron, who said that the numbers put forward in November were much too high.

In a late effort at compromise at that meeting, European Council President Herman Van Rompuy proposed a budget of €972 billion ($1.25 trillion) – €21 billion less than the 2007-2013 budget.

The numbers "need to come down, and if they don't come down there won't be a deal," Mr. Cameron said.

A senior EU official has said that, while Van Rompuy is proposing an overall cut, some items within his proposed budget will grow, including an effort to combat youth unemployment.

Spending on programs meant to ensure future prosperity, such as research and development, education and innovation, will also grow in real terms, the official said. He spoke only on condition of anonymity, in line with EU policies.

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