Spendthrifts

Ahead of tough budget negotiations next year, Britain, France, Germany, Finland, and the Netherlands submitted a joint letter to the European Commission on Saturday, stating their stance against overspending.

"European public spending can not be exempted from member states' considerable efforts to get their public spending under control," the letter, which was released by the French presidency, said.

The joint appeal was signed by French President Nicolas Sarkozy, German Chancellor Angela Merkel, Dutch Prime Minister Mark Rutte, Finnish Prime Minister Mari Kiviniemi, and British Prime Minister David Cameron.

"All around Europe, countries are tightening their belts to deal with their deficits. [The EU] cannot be immune from that," Cameron told a news conference on Friday at the close of a two-day EU summit, which set up a permanent crisis fund for the euro.

The British premier, who is implementing an unpuopular austerity drive at home and campaigned on reining in European spending in an election earlier this year, used the summit closure as an opportunity to drum up support for the initiative.

Cameron said he wanted to "keep the momentum" on limiting EU largesse after successfully leading attempts to curb the 2011 budget rise to 2.91 percent, down from the 6 percent proposed by the European Commission and the European Parliament.

"We want to do better than we did in 2011" for the EU's annual budget in 2012 and 2013, Cameron insisted.

More stability

At the end of the summit, Cameron circulated a draft letter calling for the EU's next seven-year budget, which is to run from 2014 to 2020, to be capped in line with inflation.

"The challenge for the European Union in the coming years will not be to spend more, but to spend better," the letter said.

Sarkozy told journalists the aim was not to slash the EU budget but to "stabilize" it.

"At a time when all EU member countries are making extremely important efforts to stabilize, even reduce, their budgets, it is not the right moment for the European budget to rise more than is appropriate," Sarkozy said.

Cameron denied striking secret deals to gain support from his allies, despite Britain's drive to retain a two-decade-old rebate that returns billions of euros annually to London in place of farm payments to France and Germany.

"There are no backroom deals or secret agreements. I will defend very, very strongly the British rebate. We are big net contributors to the EU," he said. "That rebate is justified."

He also denied he risks alienating new EU members in eastern Europe who fear cuts in the bloc's budget will mean a reduction in crucial regional development aid.

But Poland expressed displeasure at Britain's new move against EU spending.

Fierce resistance

"I don't think it's necessary, I don't think it's useful, I don't think it's going to show Europe some vision," said Poland's Europe Minister Mikolaj Dowgielewicz.

The head of the European Parliament's second largest bloc, Socialist leader Martin Schulz from Germany, is gearing up for battle against the big three's anti-spending drive.

Schulz described the British move as a "provocation".

"Cameron's initative is doomed to failure because it won't stand a chance in the EU Parliament", Schulz told the AFP news agency.

"I don't understand why countries like France and Germany allow themselves to be led by this agitator," he added.

Greens/European Free Alliance co-president Rebecca Harms charged: "This budgetary coup has very little to do with fiscal responsibility and owes far more to the populist whims of Cameron, Sarkozy and Merkel."

Lithuanian President Dalia Grybauskaite, who formerly served as EU budget commissioner, said the stance was normal. "And it's mainly playing, not for Europe, but for internal politics."

Budget talks are traditionally the most cut-throat negotiations in EU politics, but the formal debate is not due to begin until June 2011, once the EU executive, the European Commission, makes a draft.

Next year's budget is worth 126.5 billion euros ($166 billion), with roughly three quarters of that sum allocated for agriculture subsidies and aid for poorer regions.

Author: Natalia Dannenberg, Mark Hallam (AFP, Reuters, dpa)
Editor: Rob Turner