March 28, 2024

European Leaders Reach Budget Deal

BRUSSELS — European Union leaders on Friday agreed to a budget worth nearly €1 trillion to support farming, transportation and other infrastructure, as well as big research projects for the 27-nation bloc.

After two days of marathon negotiations, the Union’s 27 leaders agreed to a slightly smaller communal budget for the next seven years — the first decrease in its history — that reflects the climate of austerity in a region still struggling to emerge from a crippling debt crisis.

“Deal done,” Herman Van Rompuy, the president of the European Council, which organizes summit meetings, said in a message sent on Twitter.

The deal would cover the cost of project for “the rest of the decade” and was “worth waiting for,” wrote Mr. Van Rompuy.

The budget is negotiated every seven years and involves furious horse-trading as leaders focus on getting the best deal for their own countries’ citizens, rather than emphasizing pan-European considerations.

The marathon session was the second attempt to reach a deal on the funding package, which will run from 2014 to 2020; the first attempt collapsed in November.

Another failure to strike a deal on a sum of money that represents only about 1 percent of the Union’s gross domestic product would have been a severe embarrassment for the leaders, who already have spent the past few years bickering over how to save the euro.

The European Commission, the bloc’s policy-making arm, had sought an increase in the overall budget of around 5 percent to more than €1 trillion, or $1.35 trillion.

Mr. Van Rompuy pared that sum to about €973 billion at the previous summit meeting in November.

On Friday morning, Mr. Van Rompuy presented further revisions lowering the amount to about €960 billion but holding down the amount of cash governments contribute up front.

That formula was designed, in part, to satisfy countries like Britain and the Netherlands that pay more into the budget than they receive, while also accommodating the demands of countries like France and Italy that want to maintain generous payments for agriculture and infrastructure.

The deal faces still more hurdles before it is enacted by the European Parliament, which has the power to veto the budget.

Some of the most influential figures in Parliament have already signaled that they are prepared to reject a budget that foresees spending less on Europe in the years ahead.

Guy Verhofstadt, the head of the alliance of liberals in the Parliament, called on Thursday for a full-revision clause to be inserted into the budget, so that it could be increased after three years if economic conditions improved.

Martin Schulz, the president of the Parliament, said Thursday that he would not approve a budget that widened the overall gap between the amount of cash paid upfront by governments and the somewhat higher amounts, known as commitments, which make up the overall budget.

Article source: http://www.nytimes.com/2013/02/09/business/global/european-union-budget-talks.html?partner=rss&emc=rss

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