BRUSSELS — A summit of the European Union's 27 national leaders, charged with agreeing on a long-term budget for the bloc, broke up Friday afternoon without being able to reach a deal.
Coming just days after the 17 eurogroup finance ministers failed, yet again, to agree on the conditions for releasing badly needed bailout money for Greece, the failure of the two-day summit raises questions about how the bloc makes important decisions. In most cases, unanimity is required, meaning that each country wields veto power.
The EU's top officials, who put in long hours trying to soften up the national leaders individually before putting them together in the same meeting room, tried to put a brave face on the budget deadlock.
European Council President Herman Van Rompuy, who presides over the summits, said the "constructive discussions" at the summit meant an agreement could be reached early next year. He added that the national leaders had instructed him and European Commission President Jose Manuel Barroso to continue working toward consensus over the coming weeks.
Barroso, too, called the talks constructive. But he added, "we are not yet at the point of reaching consensus."
The prospect of failure had hung over the EU leaders' summit, charged with agreeing on a long-term spending plan of around €1 trillion ($1.25 trillion) for the 27-country bloc, even before the meeting began. Some countries wanted the budget to rise, while others insisted it had to fall.
Van Rompuy tried to thread the needle. He proposed a budget with some cuts, but in a post-summit press conference, he also offered a nod to those countries who believe greater spending is essential to spur growth in countries hit by recession.
"Growth in one country benefits all," he said.
British Prime Minister David Cameron, the most vocal proponent of holding the line on EU spending, said he had found "strong allies" in the Dutch and Swedish leaders. And, indeed, it appeared that some countries, including Germany, took pains to ensure that Britain — a country some fear may eventually withdraw from the EU — did not find itself isolated.
Dutch Prime Minister Mark Rutte stressed that it was important that Britain "remain engaged" with Europe "because Britain is important to the EU as a whole."
For his part, Cameron was firm.
"The deal on the table from the EU President was just not good enough," Cameron told reporters after the summit broke up.
""We haven't got the deal we wanted but we've stopped what would have been an unacceptable deal," he said. "And in European terms I think that goes down as progress."
The EU budget funds primarily programs to help farming and spur growth in the bloc's less developed countries. In financial terms, the budget amounts to only about 1 percent of the EU's gross domestic product, but carries great political significance as it lays bare the balance of power between the bloc's members.
The bloc found itself divided, notably between richer countries that wanted to contain their contributions to the common budget at a time of economic malaise, and poorer ones that rely on EU money for development aid and economic investment.
While Cameron and some other leaders demanded restraint, French President Francois Hollande wanted the budget to keep paying subsidies for farming and development programs. A number of poorer nations, which are net recipients of EU budget money, argued that a robust budget was good for all countries.
A revised proposal given to the leaders late Thursday by Van Rompuy did little to appease either side. It kept the same total of €972 billion ($1.25 trillion) in states' commitments as his first proposal — €21 billion less than the 2007-2013 budget — but it shifted some money away from investment projects toward aid for farming and development.
Hollande said Van Rompuy's proposal was reasonable. "We want a consistent budget that funds EU policies," Hollande said.
Further cuts, the French president said, would not be welcome.
German Chancellor Angela Merkel said the strong differences of opinion were no cause for alarm — and she wasn't taking sides in the argument between those who want more spending and those who want less.
"We should be able to bridge those differences," she said. "We have a reached a good basis to continue our work."
"Our bilateral talks showed there is sufficient ground to reach agreement," she said.
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.
Budget clash leaves EU summit close to failure
BRUSSELS — The prospect of failure hangs over a European Union leaders' summit intended to lay out the 27-country bloc's long-term spending plans.
While heavyweights like Britain and France are pulling in opposite directions, smaller members are threatening to veto a deal to make themselves heard.
Negotiators will try to navigate the myriad demands on the second day of the meeting Friday. A tense first session left many observers predicting leaders will need more time to bridge their differences over the bloc's spending priorities for the years to come.
"I have my doubts that we will come to an agreement," German Chancellor Angela Merkel said early Friday as she left the first day of the talks, which could stretch into Saturday.
The EU budget primarily funds programs to help farming and spur growth in the bloc's less developed countries. In financial terms, it amounts to only about 1 percent of the EU's gross domestic product, but the real significance of the budget is that it lays bare the balance of power between the bloc's members.
The bloc is divided along several lines. The most notable is between richer countries that want to reduce their contributions to the common budget at a time of economic malaise, and poorer ones that rely on EU money for development aid and economic investment.
British Prime Minister David Cameron is the most vocal leader demanding restraint, while French President Francois Hollande wants the budget to keep paying subsidies for farming and development programs for poorer nations.
But Van Rompuy's revised proposal late Thursday did not yield further to Cameron's demands for cuts, keeping to the same total.
Cameron said Friday it was unreasonable to see an increase in the bloc's spending plan for 2014-2020 at a time when many member states are cutting budgets at home.
"I don't think there's been enough progress so far," Cameron said. "I mean, there really is a problem in terms of there hasn't been the progress in cutting the proposals for additional spending. It isn't a time for tinkering. It isn't a time for moving money from one part of the budget to another. You know, we need unaffordable spending cut. That's what's happening at home; that's what needs to happen here."
Hollande and Merkel said another summit meeting might be necessary.
"We should not consider that if we don't get there tomorrow or the day after, all would be lost," Hollande said.
The amount of work Van Rompuy has to do to bring the conflicting views closer together was highlighted Thursday as the bilateral meetings preceding the summit overran, forcing the opening discussions to be delayed by 2 ½ hours.
Bilateral talks resumed early Friday, with a first joint session set for noon to see if a compromise is within reach.
Britain is backed by other net contributors to the EU budget, such as the Netherlands, Sweden and, to a certain extent Germany. Public sentiment toward EU institutions in these countries has soured as the EU institutions — and its common currency, the euro — are considered largely responsible for the financial crisis afflicting the continent.
Meanwhile, 15 of the EU's most financially and economically vulnerable countries have joined forces to oppose any 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.
They argue that they need sustained, even increased, help to close the wealth gap on the continent and that EU institutions need the means to implement their jobs and growth policies.
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.
"In talks with colleagues, I had one message. If this doesn't work out at once, let's be sure that the mood is not that dark that we have to spend months on patching up personal relationships," Dutch Prime Minister Mark Rutte said.
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.