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European Leaders Gather for a Trillion-Euro Budget Debate European Leaders Gather for a Trillion-Euro Budget Debate
(about 5 hours later)
BRUSSELS — European Union leaders are arriving here Thursday afternoon for the start of a two-day summit where they hope to hammer out a nearly €1 trillion budget to support farming, transportation and other infrastructure, as well as big research projects for the 27-nation bloc. BRUSSELS — E.U. leaders began a two-day summit meeting Thursday, warning of obstacles to reaching agreement on a nearly €1 trillion budget to support farming, transportation and other infrastructure, as well as big research projects for the 27-nation bloc.
The budget, negotiated every seven years, represents only about 1 percent of the Union’s total economic output and around 2 percent of total public spending. But it still involves furious horse-trading as leaders focus on getting the best deal for their own countries’ citizens, rather than putting pan-European considerations first. President François Hollande of France said he wanted an agreement, “provided one is possible.” He signaled a strong desire to protect the agricultural subsidies, cherished by French farmers, that make up around 40 percent of the Union’s nearly $1.34 trillion spending plan.
An attempt to reach an agreement in November failed, creating need for the leaders to take up the budget again now. Angela Merkel, the German chancellor, said on arrival at E.U. headquarters that the positions of member states were “still far apart” and suggested that a deal might be out of reach.
Enda Kenny, the prime minister of Ireland, which holds the rotating presidency of the Union, warned Irish lawmakers on Wednesday that the talks in Brussels would probably “continue into the night” and be “long and difficult.” “It would be desirable to have a joint result, but we have to wait and work hard, and that’s what I will do,” she said.
One of the complications in the current round of negotiations have been calls for budgetary rigor from leaders like Prime Minister David Cameron of Britain, who says the European Union should tighten its belt at a time when many European governments have been compelled to impose stringent budget cuts. David Cameron, the British prime minister, said the amounts of money under discussion were excessive and warned that “if they don’t come down, there won’t be a deal.”
An attempt to reach an agreement on the budget failed in November, creating the need for the leaders to try again now.
Herman Van Rompuy, the president of the European Council, which organizes summit meetings, had intended to start the session in midafternoon and had sought to push leaders to make their complaints clear in a roundtable session rather than being allowed to break into small groups.
But his plan was derailed, and the dinner and first roundtable session were delayed until the evening, as leaders formed the kind of presummit huddles that he seemingly wanted to avoid.
Mr. Hollande, who this week roundly criticized Mr. Cameron for his “à la carte” approach to Europe, after a speech last month demanding a redrawing of Britain’s relationship with the union, was an hour late to a meeting during the afternoon with the British prime minister, Mrs. Merkel and Mr. Van Rompuy.
That lateness was a sign of French displeasure with British demands, including tighter limits on farm spending, according to an E.U. diplomat, who spoke on condition of anonymity because of the sensitivity of the talks.
“The French are playing tough, and they are arguably being more rigid than in November,” said another E.U. official with direct knowledge of the talks who spoke on condition of anonymity because the meetings were going on behind closed doors.
The budget, negotiated every seven years, represents only about 1 percent of the European Union’s total economic output and around 2 percent of total public spending. But it still involves furious horse-trading as leaders focus on getting the best deal for their own countries’ citizens, rather than emphasizing pan-European considerations.
One of the complications in the current round of negotiations has been a call for budgetary rigor from leaders like Mr. Cameron, who says the Union should tighten its belt at a time when many European governments have been compelled to impose stringent budget cuts.
Britain is the strongest supporter of cuts to the part of the budget used to employ 55,000 people, including 6,000 translators, most of them in Brussels, in running the Union’s day-to-day affairs.
But because such uses represent only about 6 percent of the budget, leaders probably will need to prune money that had been foreseen for transport, energy, and digital services, among other projects, that are overseen by the commission, the bloc’s policy-making and administrative branch.
That approach has been met with suspicion, and even hostility, in other parts of the Union.That approach has been met with suspicion, and even hostility, in other parts of the Union.
This week President François Hollande of France said he was willing to make cuts in the Union’s budget, but he pointedly warned Mr. Cameron against cutting too deeply into funds that could generate jobs. After the failure to reach a budget agreement in November, another impasse this time would be a severe embarrassment for the Union’s leaders, who have already spent years bickering over how to save the euro. Another failure would also force the Union to use provisional annual budgets that cost more and could delay to 2015 any further chance of a long-term agreement.
“Why should one country be able to decide in the place of 26 others?” Mr. Hollande said, referring to Britain, as he took questions from lawmakers at the European Parliament. To avoid that, leaders were expected to meet into the early hours of Friday morning to hash out a deal that could limit the cash that governments give the Union to €900 billion or slightly higher, but leave the door open to projects requiring additional sums of about €60 billion.
Mr. Cameron, for his part, prepared for the meeting with a series of telephone discussions, seeking to forge an alliance with other leaders likely to support his aim of curbing the budget. But it remained to be seen if that formula, which would probably satisfy countries that pay more into the budget than they receive, like Britain, would also accommodate the demands of countries like France to maintain generous payments for agriculture and infrastructure.
On Wednesday Mr. Cameron spoke to the German chancellor, Angela Merkel, and the Swedish prime minister, Fredrik Reinfeldt, and followed those discussions with phone conversations Thursday morning with the Dutch prime minister, Mark Rutte, and with Herman van Rompuy, president of the European Council who will be chairman of the summit. Even if leaders strike a deal, there may be further battles ahead with the European Parliament, which has the power to veto the overall budget. Some of the most influential figures in Parliament have already signaled that they would reject a budget that foresees spending less on Europe in the years ahead.
“There are like-minded countries among the 27 and we are going to work with our allies to try to reach agreement,” said a spokeswoman to Mr. Cameron who, in line with British government policy, could not be identified by name. Those allies include the Netherlands, Denmark and Germany, she said, adding that Mr. Cameron was expecting to have further bilateral discussions with leaders including those from Sweden, the Netherlands and Denmark. Guy Verhofstadt, the head of the alliance of liberals in the Parliament, called on Wednesday for a full-revision clause to be inserted into the budget, so that it could be increased after three years if economic conditions improved.
But others say that separate phone conversations that Chancellor Merkel has held this week with Union leaders could prove more influential. Martin Schulz, the president of the Parliament, said on Wednesday that he would not approve a budget that ended up widening the overall gap between the amount of cash paid by governments and the somewhat higher amount that includes additional sums known as commitments.
After the failure to reach a budget agreement in November, another impasse this time would be a severe embarrassment for the Union's leaders who have already spent years bickering over how to save the euro. Another failure also would force the Union to use provisional annual budgets costing more and could delay any further chance of a long-term agreement to 2015. Stephen Castle contributed reporting from London and Andrew Higgins from Brussels.
To avoid that, leaders are expected to meet into the early hours of Friday morning to hash out a deal that would limit the cash that governments give the Union a total of about €905 billion, but leave the door open to projects requiring an additional €55 billion.
That formula could be enough to satisfy net contributor countries like Britain, which have been fighting most vigorously to freeze E.U. spending, while also accommodating the demands of countries like France to maintain generous payments for agriculture.
The pressure will be on Mr. Van Rompuy, president of the European Council, the body that organizes summits. to present a blueprint for the budget that leaders can use as a basis for their discussions. Mr. Van Rompuy will invite the leaders to make clear their complaints in a roundtable session rather than be allowed to break into small groups.
The leaders had been scheduled to dine together at around 6.30 p.m., but Mr. Van Rompuy's office said early Thursday afternoon that the start of summit had been delayed two hours, to 5.30 p.m. A delay suggests that Mr. Van Rompuy needed more time to fine-tune his proposals. But it could also give leaders time to form the kind of pre-summit huddles that Mr. Van Rompuy wanted to avoid.
Britain and the Netherlands are likely to reiterate calls for cuts to the part of the budget that the European Union uses to employ 55,000 people, including 6,000 translators, most of them in Brussels, in running the Union’s day-to-day affairs.
But because such uses represent only about 6 percent of all spending, leaders probably will need to prune money that had been foreseen for purposes including projects in transport, energy, and digital services that are overseen by the European Commission, the bloc’s policymaking and administrative branch. Funding for some flagship projects like a program called Global Monitoring for Environment and Security, using earth observation techniques including satellites, could also see cuts.
Viktor Orban, the Hungarian prime minister, is expected to express dissatisfaction that cuts in funding for the bloc’s least-developed regions would disproportionately affect Hungary.
Mario Monti, the Italian prime minister, could reiterate his complaint that his country, a net contributor, but hit hard by economic crisis, is being asked to pay too much.
Helle Thorning-Schmidt, the Danish prime minister, could once again threaten to veto the budget if she does not win a rebate she is seeking to meet fiscal pledges her government has already made.
In a show of solidarity with member states like Spain, where the economy has cratered in the wake of the debt crisis and where unemployment is running at 26 percent, Mr. Van Rompuy is expected to announce a plan to spend several billion euros on jobs for young people.
Even if leaders strike a deal, there may be further battles ahead with the European Parliament, which has the power to veto the overall budget. Some of the most influential figures in the Parliament have already signaled that would reject a budget that foresees spending less and less on Europe in the years ahead.
Guy Verhofstadt, the head of the alliance of liberals in the Parliament, on Wednesday called for a full-revision clause to be inserted in the budget, so that it could be increased after three years if economic conditions improve.
Martin Schulz, the president of the Parliament, said on Wednesday that he would not approve a budget that ends up widening the overall gap between the amounts of cash paid by governments and the amount that they pledge in commitments.
Stephen Castle contributed reporting from London.

This article has been revised to reflect the following correction:

This article has been revised to reflect the following correction:

Correction: February 7, 2013Correction: February 7, 2013

An earlier version of this article misspelled the surname of Martin Schulz, the president of the European Parliament.

An earlier version of this article misspelled the surname of Martin Schulz, the president of the European Parliament.