EU leaders set for budget battle

22 November 2012 Last updated at 00:01 GMT Commission President Barroso: His team manages the budget - but the politicians decide EU leaders are to begin talks on the bloc's seven-year budget, with many of them calling for cuts in line with the savings they are making nationally.

Countries that rely heavily on EU funding, including Poland and its ex-communist neighbours, want current spending levels maintained or raised.

The UK and some other net contributors say cuts have to be made. At stake are 973bn euros (£782.5bn; $1,245bn).

The bargaining in Brussels will continue on Friday, or even longer.

The draft budget - officially called the 2014-2020 Multi-Annual Financial Framework (MFF) - was drawn up by European Council President Herman Van Rompuy, who made cuts to the European Commission's original plan.

France objects to the proposed cuts in agriculture, while countries in Central and Eastern Europe oppose cuts to cohesion spending - that is, EU money that helps to improve infrastructure in poorer regions.

They are the biggest budget items. The Van Rompuy plan envisages 309.5bn euros for cohesion (32% of total spending) and 364.5bn euros for agriculture (37.5%).

The EU budget is a small fraction of what the 27 member states' governments spend in total.

Many hurdles

German Chancellor Angela Merkel says another summit may be necessary early next year if no deal can be reached in Brussels now.

In a speech to the European Parliament on Wednesday, the EU Commission President, Jose Manuel Barroso, complained, "No one is discussing the quality of investments, it's all cut, cut, cut."

UK Prime Minister David Cameron has warned that he may use his veto if other EU countries call for any rise in EU spending. The Netherlands and Sweden back his call for a freeze in spending, allowing for inflation.

Any of the 27 countries can veto a deal, and the European Parliament will also have to vote on the MFF even if a deal is reached.

Failure to agree would mean rolling over the 2013 budget into 2014 on a month-by-month basis, putting some long-term projects at risk.

If that were to happen it could leave Mr Cameron in a worse position, because the 2013 budget is bigger than the preceding years of the 2007-2013 MFF. So the UK government could end up with an EU budget higher than what it will accept now.

The European Commission says that the EU budget accounts for less than 2% of public spending EU-wide and that for every euro spent by the EU the national governments collectively spend 50 euros.

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Cameron set for EU budget battle

22 November 2012 Last updated at 07:29 GMT Herman van Rompuy will oversee the negotiations and meet leaders on a one-by-one basis David Cameron is set to press for a minimum real-terms freeze in the EU's budget as European leaders gather ahead of a crunch summit to determine its spending between 2014 and 2020.

The UK PM is seeking to build alliances in Brussels ahead of what is expected to be two days of intense negotiations.

Germany is among the UK's main allies but other nations support the European Commission's call for higher spending.

The UK Parliament recently urged the EU to cut its total expenditure.

Ahead of the special budget summit, UK Deputy Prime Minister Nick Clegg said the government's position was "tough but realistic".

He said most people would think it was "perfectly reasonable" for the EU to tighten its belt.

Spending ceiling

The EU's 27 member states must set a ceiling for what they are prepared to spend in total over the 2014-2020 period, as well as discuss how much will be set aside for specific areas such as business, agriculture and security.

The European Commission has proposed a ceiling of 1,033 billion euros (£831bn), which would be 5% higher than the current 2007-2013 period. The UK, Germany, Sweden and the Netherlands are among those who have said such a rise would be unacceptable at a time of austerity across the continent.

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Both the prime minister and I have spent, whatever our other differences on Europe, a lot of time working together to make sure the British voice is heard”

End Quote Nick Clegg Deputy Prime Minister The UK has described a separate proposal from European Council President Herman van Rompuy for a 973 billion euro (£782bn) threshold as a step in the right direction.

But the UK believes that further cuts, potentially of up to 80bn euros, can be achieved as Mr van Rompuy's plan anticipates substantial increases in certain areas such as infrastructure spending.

Mr Cameron has said he is prepared to veto any budget deal that is bad for the UK and argued that any above-inflation rise would be unjustified when many countries are cutting spending at home.

MPs voted last month to back a real-terms cut in spending, saying it would strengthen the UK's negotiating position.

But UK officials have acknowledged this will be difficult to achieve given many of the EU's poorer nations - unlike the UK, Germany and France - are net beneficiaries of the budget and unlikely to countenance any cuts.

'British voice'

Although countries' individual contributions are not up for discussion at the summit, Mr Cameron has also vowed to defend the UK's multi-billion pound rebate first secured by the Thatcher government in the 1980s.

Who wants what from the EU budget deal?

Mr van Rompuy is expected to hold one-on-one meetings with EU leaders on Thursday to establish what their "red lines" are ahead of general negotiations, which officials admit could slip into Saturday or even Sunday.

German Chancellor Angela Merkel has said she is not sure the summit will come up with a "definitive deal" and EU leaders may have to reconvene early in the new year.

Mr Clegg said the UK was looking for "just common sense".

"A common sense approach, which says look there's not enough money to go around at the moment... let's make sure that's reflected in the European Union budget and that's why we're saying that it shouldn't increase by more than inflation."

If the opportunity arose to cut the budget, the UK would seize it, he added.

"We have had to cut out many budgets here at home. We've got a tough approach but it's a realistic approach and both the prime minister and I have spent, whatever our other differences on Europe, a lot of time working together to make sure the British voice is heard."

But UK Independence Party leader Nigel Farage said Mr Cameron would be unable to get a "good deal" for the UK and that the European Commission and MEPs believed the state could "create wealth".

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Clinton says budget deal critical to U.S. global role, security

1 of 2. U.S. Secretary of State Hillary Clinton gives a speech at the Singapore Management University in Singapore November 17, 2012.

Credit: Reuters/Edgar Su

By David Brunnstrom

SINGAPORE | Sat Nov 17, 2012 3:40am EST

SINGAPORE (Reuters) - U.S. Secretary of State Hillary Clinton said on Saturday that reaching a deal to resolve America's budget crisis is critical to its global leadership and national security and would bolster efforts to project U.S. economic power around the world.

Speaking in Singapore during a tour of Asia and Australia, Clinton said that when she was in Asia last year during the height of debate about the U.S. debt ceiling, leaders from across the region asked her if the U.S. Congress would actually allow the United States to default on its debt.

"Let's be clear," she said. "The full faith and credit of the United States should never be in question."

However, Clinton, who spoke at Singapore Management University, said that with Washington gearing up for another round of budget negotiations, she was "again hearing concerns about the global implications of America's economic choices".

Clinton, who says she will step down as secretary of state early next year and has ruled out running again for the U.S. presidency in 2016, said she was now "out of politics".

She said that despite all the differences between the U.S. political parties, "we are united in our commitment to protect American leadership and bolster our national security".

"Reaching a meaningful budget deal is a critical to both," she said. "It would shore up our ability to project economic power around the globe, strengthen our position in the competition of ideas shaping the global marketplace, and remind all nations that we remain a steady and dependable partner.

"For us, this is a moment to once again prove the resilience of our economic system and reaffirm America's leadership in the world," Clinton said, stressing that U.S. leadership depended on its economic strength.

"Global leadership is not a birthright for the United States or any nation. It must be constantly tended and earned anew."

U.S. President Barack Obama and his Republican rivals are in talks aimed at avoiding what has been dubbed a "fiscal cliff" at the year-end, which experts say could push the U.S. economy back into recession.

If Congress cannot agree to less extreme steps, from January 2, about $600 billion worth of tax increases and spending reductions, including $109 billion in cuts to domestic and defense programs, will begin to kick in.

Both sides are eager to reassure the public that Washington will not see a repeat of the white-knuckle budget standoff that spooked consumers and investors last year, and Republican and Democratic congressional leaders emerged from a meeting with Obama on Friday pledging to find common ground to avert the fiscal cliff.

"HISTORY BEING WRITTEN"

Clinton said responding to threats would remain central to U.S. foreign policy, but could not be Washington's only foreign policy.

Maintaining U.S. strength would require following through on a policy of intensified engagement with the Asia-Pacific region and elevating the role of economics in foreign relations.

Clinton said the visit of Obama to Asia from Sunday - within days of his November 6 reelection - showed the importance of the region in U.S. eyes. Obama will visit Thailand, Cambodia to attend an East Asian summit, and Myanmar.

"Why is the American president spending all this time in Asia so soon after winning reelection?" Clinton asked. "Because so much of the history of the 21st century is being written here."

Clinton said the United States was making progress in talks with countries on both sides of the Pacific towards finalizing a Trans-Pacific Partnership (TPP) trade pact, which would lower barriers and raise regulatory standards in a region accounting for 40 percent of world trade.

"We will continue to work with Japan and we are offering to assist with capacity building so that every country in ASEAN can eventually join," she said, referring to the 10-member Association of Southeast Asian Nations.

Clinton said the United States would welcome the interest of any country willing to meet the standards of the TPP - including China, where some view the pact with suspicion and as a U.S. attempt to contain China's rapid growth, something U.S. officials deny.

In Beijing, an official said China had not been asked to join.

"We have looked at and continue to look at the contents of the TPP," Liang Wentao, deputy head of the Commerce Ministry's Asia Department, told reporters.

"We think there are many advanced elements to it we should study. As to whether we should join, we have not been invited."

The United States, Australia, New Zealand, Chile, Peru, Singapore, Vietnam, Malaysia and Brunei agreed this year to let Mexico and Canada into negotiations on the TPP, which could reach a conclusion next year. Japan's prime minister said this month he wants to enshrine backing for the pact in his party's election platform.

Clinton said that with the U.S. government working to bring down trade barriers and create a level playing field for U.S. firms, it was also up to them to raise their game abroad.

"Too many are sitting on the sidelines," she said. "I hear it over and over when I travel: 'Where are the American businesses?' At a time when America's domestic growth depends more than ever on our ability to compete internationally, this has to change."

(Additional reporting by Ben Blanchard in Beijing; Editing by Robert Birsel)

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EU 2013 budget talks in crisis

14 November 2012 Last updated at 11:20 GMT Martin Schulz (centre) told EU leaders that MEPs could not attend the last-ditch talks The EU has reached deadlock in talks on next year's budget, with governments refusing demands for extra money.

The crisis comes just a week ahead of a summit intended to map out EU spending plans for the next seven years.

Euro MPs refused to attend talks on Tuesday night because the governments - called the Council - did not approve an extra 9bn euros (£7bn; $12bn) in "emergency funding" for this year.

The European Commission will now have to redraft the 2013 budget plan.

If there is no deal before January the current budget will be rolled over month-by-month, and any increase in spending then requires agreement between the Commission, Council and MEPs.

In 2012 the budget for the 27-nation bloc was 129.1bn euros, a 1.9% increase on 2011.

Correspondents say the UK, Denmark, the Netherlands and Sweden are pushing hardest for the EU to rein in spending.

On a visit to Italy on Tuesday the UK Prime Minister, David Cameron, failed to get support from his Italian counterpart Mario Monti for the UK stance on the EU budget.

"Our positions have elements which do not perfectly coincide, to use British understatement," said Mr Monti, who was formerly an EU commissioner.

"We are less convinced than the United Kingdom about the need for a significant reduction."

'Raiding taxpayers'

In Brussels the European Parliament President, Martin Schulz, told 15 prime ministers on Tuesday that MEPs would not negotiate on the 2013 budget because there was no agreement on the extra 9bn euros requested to meet this year's EU bills.

The Commission says the 9bn euros would cover commitments in the areas of infrastructure, research and education.

The UK's Financial Secretary to the Treasury, Greg Clark, said "it is senseless that the only budget deal the European Parliament is interested in is one that massively increases EU spending - raiding Europe's taxpayers."

"The UK has been very clear from the outset that the EU should not be demanding billions of euros more from taxpayers when everyone is making economies at home."

The EU Commission and European Parliament want an EU budget rise of 6.8% in 2013.

But most governments want to limit the rise to just 2.8%, and the UK government, led by the Conservatives, wants EU spending frozen at 2011 levels.

The UK government also opposes a proposed 5% increase in the multi-year budget for 2014-2020, compared with the current 2007-2013 budget, threatening a veto if necessary.

An EU summit aimed at reaching a deal on that budget will be held on 22-23 November.

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