French President Emmanuel Macron arrives for an EU summit at the European Council building in Brussels, Friday, Feb. 21, 2020. In a second day of meetings EU leaders will continue to discuss the bloc's budget to work out Europe's spending plans for the next seven years. (Ludovic Marin, Pool Photo via AP)

Testy EU budget talks blocked, new summit in March likely

February 21, 2020 - 10:38 am
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BRUSSELS (AP) — Major contributors to the European Union's budget blocked progress at an emergency summit on Friday, insisting they would not stump up more funds for the bloc's next long-term spending package, worth around one trillion euros ($1.1 trillion).

The so-called “Frugal Four” of Austria, Denmark, the Netherlands and Sweden believe the EU's 2021-2027 budget, which is meant to fund ambitious climate change and digital economy policies, should amount to 1% of the 27-nation trading bloc's gross national income.

EU Council President Charles Michel, who met with EU leaders throughout the night trying to broker a compromise, has tabled a draft budget of 1.074% of gross national income. The European Parliament wants an ambitious 1.3%, while the EU’s powerful executive arm, the European Commission, prefers 1.11%.

“I can understand that when you're a prime minister in a country that has poor regions, infrastructures, I can understand that ... but when it comes to the percentage, I stand firm," Danish Prime Minister Mette Frederiksen told reporters in Brussels Friday.

Asked whether the standoff can be resolved, Frederiksen said “no, I don’t think so. I’m willing to stay, and I’m prepared to stay the whole weekend. But no, I don’t think we’re going to reach an agreement.”

She said that another summit would be required, probably in early March.

Latvian Prime Minister Krisjanis Karins held out hope for a breakthrough. “It is difficult to find. We are working on it," he said, adding that more time might not fix things. “The question everyone needs to ask: what would change in 1, 2, or 3 weeks' time?"

Broadly speaking, the “Frugal Four” with the backing of Germany are lined up against 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.

“If we want to find an agreement, I think everybody has to be flexible. It cannot be the way that one or some countries try to dictate the outcome," said Finnish Prime Minister Sanna Marin. Asked about the chances of a breakthrough, she said: “It looks quite difficult."

Almost exactly 24 hours after the summit started, Hungarian Prime Minister Viktor Orban told reporters that the “Frugal Four” are seeking a budget that for him and his allies lacks ambition.

“I don’t think this will be over with one negotiation,” Orban said.

After a night of bilateral talks with Michel and in small groups, the leaders were scheduled to meet together again Friday morning, but several hours later it still hadn't happened.

What’s at stake is whether the leaders are ready to put their money where their mouths are when it comes to European policy ambitions. At the same time, amid economic stagnation, they cannot afford to give the impression to their home audiences that they are splashing taxpayers’ cash.

With Britain gone from their ranks, the leaders want to prove that Europe can still forge ahead toward brighter horizons, but Brexit has left them with a sizable budget hole — about 75 billion euros ($81 billion) over seven years.

In the great scheme of things this is not a huge amount of money for the world’s biggest trading bloc. Even if a trillion euros sounds like a lot, it actually amounts to about 1% of the gross national income of the 27 nations combined.

The budget is also made up of customs revenue and income from fines levied by the commission, and the EU's executive arm has raked in plenty of those from antitrust cases involving tech firms and others in recent years.

So no country even pays 1% of its own gross national income, and the debate is over some 0.3 percentage points.

But it’s not just about convincing reluctant member countries to stump up funds. The parliament must also ratify any final budget agreement and for the moment EU lawmakers are far from happy.

“At the moment, we remain 230 billion euros ($248 billion) apart," European Parliament President David Sassoli said this week.

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Angela Charlton in Brussels and Jan M. Olsen in Copenhagen contributed to this report.

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