Talks on next year's European Union budget have collapsed after the European parliament refused to sit at the negotiating table with governments unwilling to pay this year's bills.
At the centre of the row was $11.4bn worth of unpaid 2012 bills covering a range of causes, including Europe's Erasmus student exchange programme, research funds, humanitarian aid and cash for rural development.
The dispute between poorer and richer states bodes badly for the fate of a key summit days away on the bloc's even more contested longer-term budget for 2014-2020.
"If they can't agree to pay the bills, what can they agree to?" Hannes Swoboda, a politicin who heads the parliament's socialist group, said.
The one exception was an agreement to release $851m set aside to compensate Italian earthquake victims.
In a statement issued three hours before EU budget ministers were to go into talks on the 2013 budget, the parliament refused to attend on grounds that EU nations were depriving Europe's needy of key funds and failing to honour commitments.
"These funds are needed for the European Union to respect its legal obligations, that is to pay for bills incurred for goods, works and services delivered," said the parliament's president Martin Schulz.
The European Commission, the EU executive, will now have to draw up a new 2013 budget proposal and seek an agreement on it by year's end.
'Friends of Cohesion'
Meanwhile, 15 European heads of state flew to Brussels to set a pre-summit agenda of what is termed the "Friends of Cohesion" group.
The EU's cohesion funds, the second biggest item on the bloc's budget after the Common Agricultural Policy, aim to help Europe's poorer nations catch up with others, economically and socially.
Members of the Friends of Cohesion are net recipients of the EU's almost trillion-euro budget.
Chaired by Poland and Portugal, the group includes Bulgaria, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Romania, Slovakia, Slovenia, and most recently, Spain.
The countries' opponents within the bloc want a $127bn cut from the European Commission's proposed $1.65 trillion budget for 2014-20, which is a five per cent decrease from the current one.
They argue that when many member nations are being forced to make cutbacks, the EU budget should also be cut back in real terms.
The group includes Austria, Britain, Denmark, France, Finland, Germany, the Netherlands and Sweden.
At worst, they appear ready to settle for a real-term freeze in spending.
Net contributors Belgium, Luxembourg and Italy are refusing to take sides, as is Ireland, which is a net recipient but is remaining aloof as it takes over the EU presidency in January.
For 2013, the European Commission and European Parliament were seeking a 6.8-per cent increase - or $11.4bn - to $175bn to bolster growth and jobs in the weakening economy.
The commission argues the lack of budget deal will seriously undercut any chance for economic growth, worsening the very problems such countries say must be fixed through more belt-tightening.
If there is no agreement on the 2013 budget, the EU would base its spending for next year on the 2012 programme, rolled over on a monthly basis.