The EU′s trillion-euro argument | Europe| News and current affairs from around the continent | DW | 22.11.2012
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The EU's trillion-euro argument

The leaders of the 27 members of the EU have started what is likely to be a marathon session. It's been a long time since the bloc has argued about money with such vigor.

Baustelle EU. Baustellenschild vor einer Baustelle am Rond point Schuman, Brüssel. Im Hintergrund das Gebäude des Europäischen Rates, Ratsgebäude Justus Lipsius, Aufgenommen am 22.11.2012 in Brüssel. Foto: Bernd Riegert, DW

Symbolbild EU Gipfel Baustelle

It could turn ugly. Even before the special summit on the new multi-year European Union budget, several countries had threatened a veto. Since the budget must be agreed unanimously, a single vote against would be enough to scupper the whole meeting. What makes things more complicated is that some of the demands rule each other out.

A lot is at stake - a common fund of around a trillion euros ($1.28 trillion) - for the period between 2014 and 2020. Though a trillion euros is only a small part of the total national budgets of the member states, emotions are running high, because for many the argument is over fundamental principles. Some say, for instance, that the credibility of the EU itself is at stake - but some mean the credibility of a prudent, efficiently-run economy, and others the credibility of European solidarity.

Britain's Prime Minister David Cameron arrives at the EU council headquarters for a European Union leaders summit discussing the European Union's long-term budget in Brussels November 22, 2012. EU heads of state and governments will need to agree on a first-ever cut in the bloc's long-term spending plans if they are to clinch a deal at the summit starting on Thursday, with the drive for austerity likely to trump all other concerns. REUTERS/Yves Herman (BELGIUM - Tags: POLITICS BUSINESS)

Cameron wants to cut the EU budget radically

Growth plan or waste plan?

On the table is a European Commission proposal that envisions a total budget of slightly more than a trillion euros. The richer contributing countries want to reduce the amount by at least 100 billions. Their argument is that in times of strained national budgets, they can't spend any more on Europe.

But the Commission and the European Parliament say that if the EU is to be handed more and more responsibilities, it needs to be supplied with adequate financial means to fulfill them. Not only that, they say that the common budget is essentially a gigantic growth and investment program that is desperately needed precisely because of the current crisis. While the plan's critics can accept the growth argument - at least in principle - many suspect that the EU does not spend the money carefully enough, and does not impose effective checks. They say the EU is prone to wastage, which is why investments are better made at a national level.

Veto threats from all sides

But the conflict is not just between the member states, the Commission and the parliament. The fronts also run between member states themselves. The rule of thumb is clear: the rich contributors, those which pay more in than they get out, want to save money, while the poorer countries, which get more out than they put in, want a larger common budget.

And then there's the special case: Great Britain. Prime Minister David Cameron would like to cut the common budget even more radically than even Germany. Since he is under massive domestic pressure, he has also been the one to wave his veto threat most conspicuously.

He also wants to fight for a bigger rebate for the UK, as he confirmed once again on his arrival in Brussels. Other contributors, including Germany, are also getting a rebate. And if they get one, they will want to keep it.

European Union President Herman Van Rompuy of Belgium makes a statement at the Finnish Prime Minister Jyrki Katainen's official residence in Helsinki October 12, 2012. The European Union won the Nobel Peace Prize for its long-term role in uniting the continent, the Norwegian Nobel Committee said on Friday, an award seen as morale boost for the bloc as it struggles to resolve its debt crisis. The committee praised the 27-nation EU for rebuilding after World War Two and for its role in spreading stability to former communist countries after the 1989 fall of the Berlin Wall. REUTERS/LEHTIKUVA/Vesa Moilanen

Van Rompuy has suggested a few compromises

European Council President Herman Van Rompuy has suggested some compromises, such as limiting agriculture expenditure, the single biggest part of the common budget. But that notion only drew a veto threat from a different side: France, whose farmers benefit particularly from these agricultural subsidies. Altogether, about a third of the governments have threatened a veto, each veiling their threats to varying degrees, and some of their positions effectively rule each other out.

Tensions raised by crisis

The row over the common budget is one of the many signs that the eurozone crisis has significantly exacerbated tensions within the EU. Rich against poor, north against south, and even west against east - old member states against new.

Should the summit fail, and there is much to suggest that it might, the current budget will remain in force. In that case, the EU must get by with a twelfth of its current expenditure from one month to the next. That might even be fine by many, because it would mean there could be no increase. But it would of course complicate the work enormously. But the biggest problem is probably that it would poison the atmosphere in the EU even more. For that reason, many EU representatives say that the summit simply cannot be allowed to fail if Europeans are to find a new way of working together.

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