European Leaders Gather for a Trillion-Euro Budget Debate

BRUSSELS — European Union leaders are arriving here Thursday afternoon for the start of a two-day summit where they hope to hammer out a nearly €1 trillion budget to support farming, transportation and other infrastructure, as well as big research projects for the 27-nation bloc.

The budget, negotiated every seven years, represents only about 1 percent of the Union’s total economic output and around 2 percent of total public spending. But it still involves furious horse-trading as leaders focus on getting the best deal for their own countries’ citizens, rather than putting pan-European considerations first.

An attempt to reach an agreement in November failed, creating need for the leaders to take up the budget again now.

Enda Kenny, the prime minister of Ireland, which holds the rotating presidency of the Union, warned Irish lawmakers on Wednesday that the talks in Brussels would probably “continue into the night” and be “long and difficult.”

One of the complications in the current round of negotiations have been calls for budgetary rigor from leaders like Prime Minister David Cameron of Britain, who says the European Union should tighten its belt at a time when many European governments have been compelled to impose stringent budget cuts.

That approach has been met with suspicion, and even hostility, in other parts of the Union.

This week President François Hollande of France said he was willing to make cuts in the Union’s budget, but he pointedly warned Mr. Cameron against cutting too deeply into funds that could generate jobs.

“Why should one country be able to decide in the place of 26 others?” Mr. Hollande said, referring to Britain, as he took questions from lawmakers at the European Parliament.

Mr. Cameron, for his part, prepared for the meeting with a series of telephone discussions, seeking to forge an alliance with other leaders likely to support his aim of curbing the budget.

On Wednesday Mr. Cameron spoke to the German chancellor, Angela Merkel, and the Swedish prime minister, Fredrik Reinfeldt, and followed those discussions with phone conversations Thursday morning with the Dutch prime minister, Mark Rutte, and with Herman van Rompuy, president of the European Council who will be chairman of the summit.

“There are like-minded countries among the 27 and we are going to work with our allies to try to reach agreement,” said a spokeswoman to Mr. Cameron who, in line with British government policy, could not be identified by name. Those allies include the Netherlands, Denmark and Germany, she said, adding that Mr. Cameron was expecting to have further bilateral discussions with leaders including those from Sweden, the Netherlands and Denmark.

But others say that separate phone conversations that Chancellor Merkel has held this week with Union leaders could prove more influential.

After the failure to reach a budget agreement in November, another impasse this time would be a severe embarrassment for the Union’s leaders who have already spent years bickering over how to save the euro. Another failure also would force the Union to use provisional annual budgets costing more and could delay any further chance of a long-term agreement to 2015.

To avoid that, leaders are expected to meet into the early hours of Friday morning to hash out a deal that would limit the cash that governments give the Union a total of about €905 billion, but leave the door open to projects requiring an additional €55 billion.

That formula could be enough to satisfy net contributor countries like Britain, which have been fighting most vigorously to freeze E.U. spending, while also accommodating the demands of countries like France to maintain generous payments for agriculture.

The pressure will be on Mr. Van Rompuy, president of the European Council, the body that organizes summits. to present a blueprint for the budget that leaders can use as a basis for their discussions. Mr. Van Rompuy will invite the leaders to make clear their complaints in a roundtable session rather than be allowed to break into small groups.

This article has been revised to reflect the following correction:

Correction: February 7, 2013

An earlier version of this article misspelled the surname of Martin Schulz, the president of the European Parliament.

Article source: http://www.nytimes.com/2013/02/08/business/global/european-leaders-gather-for-a-trillion-euro-budget-debate.html?partner=rss&emc=rss