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EU leaders in Brussels for key budget talks

Differences persist as leaders gather to finalise European Union's budget for next six years.
Last Modified: 07 Feb 2013 23:42
German Chancellor Merkel said on Thursday that it was still unclear if an agreement would be reached [Reuters]

European leaders are in Brussels for what is expected to be a tense two-day summit aimed at finalising the European Union's budget for the next six years.

Germany remains unsure of a deal and Britain and France are at loggerheads over spending projections for the rest of the decade.

British Prime Minister David Cameron and his Czech counterpart Petr Necas each threatened to veto a deal in what would be the second collapse in negotiations after a breakdown in November - although senior officials have maintained for days that failure is not an option.

German Chancellor Angela Merkel spoke in cautious terms as she headed for a session that was put back two-and-a-half hours to allow officials to try and bridge differences over the numbers that will shape priorities of the 2014-2020 budget.

French President Francois Hollande said cuts that did not protect support for farmers and target investment for growth and job creation at a time of record unemployment in Europe would not win his backing.

Cameron said that the numbers for spending were "much too high". Necas echoed that sentiment, adding: "We are ready to use a veto."

"We can not say yet if there will be an agreement," warned Merkel, who backs Cameron's demands for European Union spending cuts to mirror national savings in a time of austerity following the debt crisis.

"The positions are still quite far from each other," she added after overnight talks with Hollande in Paris to find common ground around a proposal drawn up by summit chair and EU president Herman Van Rompuy.

Merkel said that it was of "great importance that we can plan and that we spend money carefully", but that it was equally crucial EU partners find "solidarity between net payers and receiving countries on the other hand".

Al Jazeera's Paul Brennan, reporting from Brussels, said that the talks were "hugely significant".

"The difficulty, though, is that you have 27 member nations in the European Union and all 27 have to sign off on this deal. And with the variety of countries that are now in this EU, from countries like the UK and France - large, industrial countries - to the smaller nations like Lithuania and Slovakia, for example," he said.

Negotiations were due to begin at 14:00 GMT, but have been pushed back repeatedly as countries attempt to hammer out a compromise behind closed doors.

Growth versus austerity

The biggest countries pay more to the EU than they get back in grants or rebates, and the argument has sharpened because of the effect domestically of public spending cuts in a time of debt and recession.

Hollande said he would not agree to a budget that "abandons farming and ignores growth".

"I have come to seek an agreement - but only if possible," he said. "Should some [partners] be unreasonable, I will try to reason with them - but only up to a point."

Italy also wants to see money ring-fenced for investment in areas that can generate jobs in a faltering economy, such as cross-border energy, transport and digital networks.

The European Commission, the EU's executive arm, initially wanted a 5.0 percent increase in member state commitments to $1.4 trillion (1.04 trillian euros) for the 2014-20 budget.

Van Rompuy cut that back to 973 billion euros in November, and EU diplomatic sources said he could reduce this figure - the maximum amount member states agree to contribute - to around 957 billion.

A new element to negotiations is that the EU parliament now has to approve any budget deal and assembly head Martin Schulz has said lawmakers are ready to throw out any agreement they think stunts Europe's ambitions for the next decade.

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Source:
Al Jazeera and agencies
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