1 Trillion Euros: EU Leaders Get Into Big Fight Over Budget

European leaders argued into the early hours of Friday about how to spend and share some 1 trillion euros ($1.1 trillion) over the next seven years. Their first summit since Britain quit the EU last month has been bruising, long — and so far inconclusive.Gaps and resentments between wealthy and poorer members quickly surfaced as presidents and prime ministers from the European Union’s 27 countries gathered Thursday in Brussels. The unity they showed during four years of Brexit talks was nowhere to be seen as they wrangled over the EU’s future priorities and who should pay for its ambitions.From farm subsidies to beefed-up border security or unprecedented climate investment, every EU leader wants the continent-wide budget to fund their own national priorities. Outside the summit center, farmers rolled tractors down the street to push their demands for sufficient funds.“I don’t plan to put my signature to this,” Dutch Prime Minister Mark Rutte said of the latest compromise budget proposal. All came in for the long haul, and Rutte was prepared, carrying a biography of Polish composer Frederic Chopin to get him through the long hours of negotiations.European Council President Charles Michel arrives for an EU summit at the European Council building in Brussels, Feb. 20, 2020.Each leader laid out priorities at a collective round-table meeting, and then EU Council President Charles Michel met with each leader one by one to discuss their grievances and demands, officials said.The summit stretched past midnight with no breakthrough in sight.The Greek leader wants a bigger budget. The Finnish leader wants it smaller. France wants more money for joint defense. Lithuania wants more money for farmers.Meanwhile, concerns are growing about potential conflicts of interest that could see hundreds of millions of euros in funds granted to companies linked to some of the very people deciding how the money should be spent.Diplomats and number-crunchers have worked on the budget for years but the issues are so divisive that the leaders’ summit might last into Saturday and still end without a result.“There are lot of concerns, priorities, and interests,” Michel said. “I’m well aware that the final steps that must be taken to find a compromise are always the most difficult.”German Chancellor Angela Merkel also said she hoped “we get at least a good deal further,” but was forthright in defending the wealthy nations that put more into the shared EU budget than they get out of it. “For net contributors the balance is not right yet.”The EU nations need to regroup after Britain’s departure three weeks ago, and a show of unity on their common budget could help in that regard.“With Great Britain leaving, it is a clear signal we have to give to our citizens that Europe is alive and well and we can continue functioning,” said Latvian Prime Minister Krisjanis Karins.Prospects of that don’t look good.Britain’s exit means the loss of up to 75 billions euros ($81 billion) in net contributions to the budget, and how to make up for that is causing friction. Leaders of rich nations don’t want to have to pay more into that common EU pot, and those from poorer member states are angry at the prospect of receiving less money from the EU.Even if a trillion euros ($1.1 trillion) sounds like a lot, it actually amounts to about 1% of the gross national income of the 27 nations combined. The debate is over some 0.3 percentage points.Michel came into the summit with a draft budget at 1.074% of EU gross national income. The parliament wants 1.3%, while the EU’s powerful executive arm, the European Commission, prefers 1.11%.Farmers and tractors gather outside of an EU summit in Brussels, Feb. 20, 2020. Baltic farmers on Thursday were calling for a fair allocation of direct payments under the European Union’s Common Agricultural PolicyIt’s not just about convincing reluctant member countries to stump up funds. The European Parliament must also ratify any final budget agreement and the EU lawmakers are not happy.“At the moment, we remain 230 billion euros ($248 billion) apart,” European Parliament President David Sassoli said this week.Ahead of the negotiations, the 27 member nations are roughly divided into two main camps. The so-called “Frugal Four” of Austria, Denmark, Rutte’s the Netherlands and Sweden versus the “Friends of Cohesion,” a group of mainly central and eastern European nations who want to see the continued flow of “cohesion funds,” money earmarked to help develop poorer regions.The frugal four would like the budget to drop to as low as 1% of gross national income and say that with the loss of Britain the EU has to cut its coat according to its cloth.French President Emmanuel Macron wants to go the other way.“’It would be unacceptable to have a Europe that compensates the departure of the British by reducing spending.”Complicating things further is the level of global uncertainty beyond the continent. While climate change was largely a technical matter during the last budget negotiations seven years ago, this time the EU is planning to spend a quarter of its budget on green issues, hoping to set an example for governments around the world.
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