Europe fighting over money

Oat harvest near Cambridge, England - file pic The UK wants spending on farm subsidies cut - France and some other countries say no

Brussels is preparing for a row - a long, bitter argument over money.

On Thursday Europe's leaders will meet to decide on the EU's budget for 2014-2020. The meeting may extend into the weekend and there is both a fear and an expectation of failure.

At this meeting national interests will be paramount. Voters back home will judge what benefits were won and at what cost. Leaders are acutely aware of that.

The UK is singled out as the deal-breaker, by insisting on a budget freeze, but in truth there are many different agendas.

The summit will also cast light on how the EU spends its funds: Does the EU at this time need to build a House of European History at a cost of 50m euros (£40m; $64m)? Does the European Council need a new Europa HQ at a cost of 310m euros? Can shuttling the European Parliament between two places at a cost of 180m euros a year be defended?

When the Court of Auditors finds 4% of spending "irregular" what does that mean? Should a member of the Commission receive a monthly transitional allowance for three years after leaving office? And so on.

There are many in Brussels who will argue that these questions miss the point. Overwhelmingly funds from the budget go back into the community and help boost growth and innovation.

Different visions

The starting point for all this is a proposal by the European Commission to increase the budget by 5% over the next seven years to around one trillion euros. The UK, Germany, Sweden, the Netherlands and others say this cannot be justified at a time of cuts to national budgets. The EU cannot call for spending cuts in places like Greece and Spain whilst exempting itself, they argue.

The Commission has its allies - mainly those countries from Eastern and Central Europe, led by Poland, which benefit from the EU funds to help poorer regions.

Many countries have yet to reveal their final negotiating position. Britain wants to freeze the budget, allowing for inflation. That would mean about 200bn euros less than the Commission's plan. Germany wants to limit the increase to 1% of the EU's total output (GNP), which would come in about 130bn euros less than the Commission.

Other budget proposals have been tabled. The President of the European Council, Herman Van Rompuy, has suggested a budget that would be 75bn euros less than the Commission. That would involve the hard-pressed Spanish and Italians losing some funding. "Unacceptable", says the Spanish Prime Minister, Mariano Rajoy.

Behind these ballpark figures lie many other arguments. There will be pressure for Britain to reduce its rebate, negotiated by Margaret Thatcher in 1984, which is worth more than £3bn a year. No way, says the UK. Other countries like Denmark are insisting that they, too, get a rebate.

Farm subsidies

The arguments have focused attention once again on how the budget is made up. The largest single budget item remains farm subsidies under the Common Agricultural Policy. It accounts for 37% of the budget.

Many countries believe that reflects the world of the 1950s and not how it is today. So countries like Sweden and the UK want further cuts. The French see the subsidies as protecting their way of life. "There can be no question of us withdrawing even one euro from the CAP,' said the French Prime Minister Jean-Marc Ayrault.

The UK has proposed scrapping EU funding for the poorer regions of the richer countries. Italy won't accept that.

The Germans are arguing for a new structure that will allow for much greater accountability in the way money is spent. In exchange for compromise they are talking of independent oversight of spending.

Many leaders, however, will find compromise difficult. With even the opposition in Britain urging a "hard-headed" approach to the EU's problems David Cameron has little room for manoeuvre. The French too. President Hollande, increasingly unpopular at home, cannot easily agree to farm subsidies being reduced.

Some countries may be willing to see Britain to use its veto. It would allow the UK to be cast as spoiler and would mask the divisions elsewhere. If a new seven-year budget deal cannot be agreed then the EU will finance itself on an annual basis. That budget would be decided by qualified majority voting. Britain would not have a veto.

Some member states are inclining towards an annual budget as a way of sidelining Britain. It tells you something of the mood in Brussels that there are already discussions on how to circumvent a British veto.

Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this

    Comment number 592.

    Eddy from Waring
    "Probably more than you suppose."
    Now if that's to be believed, tell us what I suppose, if you can of course.

  • rate this

    Comment number 591.


    "...What has"probably" got to do with anything?..."


    Probably more than you suppose.

  • rate this

    Comment number 590.

    "Veto 1 party blocking the wishes of the others"
    That was democratically decided by each member of the EU years ago.Don't you understand?

    "So if England wants to Veto Scotlands democratically decision to leave"
    You're comparing apples with pears,stop it's becoming embarrassing

    "Ask to leave well and good"
    Your English is slipping now

    "2nd thoughts just leave"
    What about democracy?

  • rate this

    Comment number 589.

    With kane a close second --down the street.

  • rate this

    Comment number 588.

    Veto - one party blocking the wishes of the others.

    So if England wants to Veto Scotlands democratically decision to leave (if it does indeed vote that way) then that' OK??

    A Veto by a minority is never going to sit well with democracy, and even then you need a super majority to overcome it (oh that's not in the EU ....)

    Ask to leave well and good...

    second thoughts - just leave

  • rate this

    Comment number 587.

    "I see dmr is attempting intellectuality."
    The only surprise here is that you noticed. It ranks as a breakthrough and rewards the patience of many.

  • rate this

    Comment number 586.

    I see dmr is attempting intellectuality.

    -- with random knowledge.

  • rate this

    Comment number 585.

    "Well you can support undemocratic measures"
    The problem here is that you consider using a veto as "un-democratic",
    Why? Did you never consider that you'd be in a lonely crowd of one with this notion? Just because you claim it's un-democratic, please don't expect anyone else to be dim enough to swallow it.

    "Not suprised, at this just disappointed."

  • rate this

    Comment number 584.

    #578 mrn

    "575. Absolutely. British and American troops deserve the highest praise for their sacrifices. 1million died which is a hell of a lot."

    -- many died as they were met on the beaches of Normandy by the enemy in trucks made by Opel -- an American company by then.

    --as small part of a long story.

  • rate this

    Comment number 583.

    582. kane

    Well you can support undemocratic measures whilst maintaining a "democratic right" on the issue of self determination, however this can only be seen as rather hypocrytical, but then the morality of demanding what you would like by whatever means possible seems prevalent in todays society.

    Not suprised, at this just disappointed.

  • rate this

    Comment number 582.

    "If you support a democratic government you should also abhor the veto as very un-democratic."
    At least we all now know what we "should" be doing.

    "So you can't ask for a referendum and the veto...."
    I think you'll find that you can.

    "Never simple,"
    Far more difficult for some than others.

  • rate this

    Comment number 581.

    The EU wastes lots of money. So do ALL the compositional governments. Governments waste money - so should we have anarchy????

    If you support a democratic government you should also abhor the veto as very un-democratic.

    So you can't ask for a referendum and the veto....

    Never simple, always Hobsons' choice of the least worst option.

    So what is the least worst?

  • rate this

    Comment number 580.

    576 Bumstead
    In fact it was Russia and Germany that were allies. But Germany decided to renege the pact they had with Russia not to wage war on each other. The British and Americans never saw Russia as an ally. They simply shared a common enemy.
    Even the intellectually dishonest know that.

  • rate this

    Comment number 579.

    570.Eddy from Waring

    However, in all frontier science, we as a species can achieve more by pooling the contributions of many nations, than by acting alone

    EUp: But we don't need integration to cooperate.

  • rate this

    Comment number 578.

    575. Absolutely. British and American troops deserve the highest praise for their sacrifices. 1million died which is a hell of a lot. But we should also recognise 1m Russians died in Stalingrad alone, another million in the siege of Leningrad, 20m in all. And the majority of German casualties were on the Eastern front. I would also agree Stalin was probably as bad as Hitler.

  • rate this

    Comment number 577.

    576 Bumstead

    "Adolf Schicklgruber for Iosif Vissarionovich Dzhugashvili. Some ally!"

    Quite! And one who killied three times as many people as Adolf did, including millions of his countrymen.

    Not forgetting the millions of prisoners in the GULAG and many more millions of Eastern Europeans under the communist sickle.

    As you say, some ally. But the victors write the history books.

  • rate this

    Comment number 576.

    @574 And Eastern Europe exchanged one dictator for another in 1945- Adolf Schicklgruber for Iosif Vissarionovich Dzhugashvili. Some ally!

  • rate this

    Comment number 575.

    574,I think it was when America entered the war that the tide turned, true Hitler opened too many fronts, but the British and American troups deserve a little bit of the praise for their sacrifices.

  • rate this

    Comment number 574.

    573. Dailymailreader. I think you'll find it was the Soviet Union, not us or the Americans who defeated fascist Germany. Though certainly with supplies from the US.

  • rate this

    Comment number 573.

    Margaret, we owe a great debt to these nations, who happily stood by our side to defeat the evil of fascist Germany.
    The EU is changing in shape, rejecting democracy, shaped by the interests of big corporations and other "interests" is slowly becoming what it actually was born out of. Fascism is the complete interest of state at the cost of the voice of the individual, the EU!


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