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| European Union Leaders Agree to Slimmer Budget | European Union Leaders Agree to Slimmer Budget |
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| BRUSSELS | |
| As European Union leaders began their 14th hour of budget negotiations after a sleepless night, Valdis Dombrovskis, the prime minister of Latvia, took the floor early Friday to address what, for his Baltic nation of around two million people, is a vital question: Why should a Latvian cow deserve less money than a French, Dutch or even Romanian one? | |
| In a system that requires unanimous approval of budget decisions, what Latvia wants for its dairy farmers — or Estonia for its railways, Hungary for its poorer regions or Spain for its fishermen — is no small matter. It is this cacophony of local concerns that explains why, despite Germany’s outsize role in decision-making, the European Union has such trouble reaching an agreement on something as basic as a budget. | In a system that requires unanimous approval of budget decisions, what Latvia wants for its dairy farmers — or Estonia for its railways, Hungary for its poorer regions or Spain for its fishermen — is no small matter. It is this cacophony of local concerns that explains why, despite Germany’s outsize role in decision-making, the European Union has such trouble reaching an agreement on something as basic as a budget. |
| And if simply agreeing to a budget is so daunting to member countries, it raises serious questions about the limits of the political and economic integration that have long been the master plan for champions of European unity. | And if simply agreeing to a budget is so daunting to member countries, it raises serious questions about the limits of the political and economic integration that have long been the master plan for champions of European unity. |
| After a failed attempt to set spending targets at a summit meeting in November and in a 24-hour marathon of talks this week, European leaders finally agreed late Friday to a common budget for the next seven years. | |
| The new budget, which is slightly smaller than its predecessor — the first decrease in the European Union’s history — reflects the climate of austerity across a Continent still struggling to emerge from a crippling debt crisis. | |
| The colossal effort that was required to agree to a sum of about 960 billion euros ($1.3 trillion), a mere 1 percent of the bloc’s gross domestic product, exposed once again the stubborn attachment to national priorities that has made reaching agreements on how to save the euro so painful in recent years. | The colossal effort that was required to agree to a sum of about 960 billion euros ($1.3 trillion), a mere 1 percent of the bloc’s gross domestic product, exposed once again the stubborn attachment to national priorities that has made reaching agreements on how to save the euro so painful in recent years. |
| “We need to agree, and to agree we need to take into account all countries,” Mr. Dombrovskis said in an interview. The Latvian leader, who rushed to his hotel for a shave, shower and change of shirt in the middle of the night, described the ordeal as “not a pleasant experience,” but said, “It only happens every seven years, so we can tolerate it.” | “We need to agree, and to agree we need to take into account all countries,” Mr. Dombrovskis said in an interview. The Latvian leader, who rushed to his hotel for a shave, shower and change of shirt in the middle of the night, described the ordeal as “not a pleasant experience,” but said, “It only happens every seven years, so we can tolerate it.” |
| But toleration is not the same thing as cooperation. | But toleration is not the same thing as cooperation. |
| “What we’re seeing is that European integration is very important to European leaders as long as it doesn’t imply that someone has to be paying for someone else,” said Daniel Gros, director of the Center for European Policy Studies, a research organization in Brussels. “Sharing a European budget is not going to be the essence of the E.U., but crafting the rule books for open borders and stable banking systems will be.” | “What we’re seeing is that European integration is very important to European leaders as long as it doesn’t imply that someone has to be paying for someone else,” said Daniel Gros, director of the Center for European Policy Studies, a research organization in Brussels. “Sharing a European budget is not going to be the essence of the E.U., but crafting the rule books for open borders and stable banking systems will be.” |
| The spectacle of European leaders haggling through the night over amounts of money representing rounding errors in their national accounts demonstrated vividly their reluctance to make collective policies that erode their nations’ sovereignty. | The spectacle of European leaders haggling through the night over amounts of money representing rounding errors in their national accounts demonstrated vividly their reluctance to make collective policies that erode their nations’ sovereignty. |
| “The budget negotiations are the most visible sign of member states winning and losing from the European Union,” said Hugo Brady, a senior research fellow at the Center for European Reform, a research organization. “The result is a totally parochial budget that is poorly adapted to rapidly changing times.” | “The budget negotiations are the most visible sign of member states winning and losing from the European Union,” said Hugo Brady, a senior research fellow at the Center for European Reform, a research organization. “The result is a totally parochial budget that is poorly adapted to rapidly changing times.” |
| Before it becomes law, the deal faces yet another hurdle in the European Parliament, which has the power to veto the budget. | Before it becomes law, the deal faces yet another hurdle in the European Parliament, which has the power to veto the budget. |
| Some of the most influential figures in Parliament have already signaled that they are prepared to reject a budget that would spend less on Europe in the years ahead. | Some of the most influential figures in Parliament have already signaled that they are prepared to reject a budget that would spend less on Europe in the years ahead. |
| Martin Schulz, the president of Parliament, said this week that he would not approve a budget that widened the gap between the cash governments pay up front and the somewhat higher amounts, called commitments, that make up the overall budget. | |
| Britain, Sweden and the Netherlands were among the Northern European nations that fought hard to reduce agricultural subsidies and increase spending on research and development to bolster the bloc’s global competitiveness. | Britain, Sweden and the Netherlands were among the Northern European nations that fought hard to reduce agricultural subsidies and increase spending on research and development to bolster the bloc’s global competitiveness. |
| Despite those efforts, farm spending remained the largest single portion of the budget, accounting for about 38 percent of the total — although that was down from about 42 percent in the previous seven-year budget period. | Despite those efforts, farm spending remained the largest single portion of the budget, accounting for about 38 percent of the total — although that was down from about 42 percent in the previous seven-year budget period. |
| Galileo, a grossly overbudget and still unfinished satellite navigation project that aims to free Europe from its dependence on the United States’ global positioning system, escaped the cuts and is to receive 6.3 billion euros from 2014 to 2020. | Galileo, a grossly overbudget and still unfinished satellite navigation project that aims to free Europe from its dependence on the United States’ global positioning system, escaped the cuts and is to receive 6.3 billion euros from 2014 to 2020. |
| At a news conference on Friday, President François Hollande of France, who had lobbied hard against cuts and in favor of what Paris promoted as a more “European” approach, lamented the overall shape of the deal. But he cheered the preservation of heavy spending on farm subsidies, of which France is the biggest beneficiary. | At a news conference on Friday, President François Hollande of France, who had lobbied hard against cuts and in favor of what Paris promoted as a more “European” approach, lamented the overall shape of the deal. But he cheered the preservation of heavy spending on farm subsidies, of which France is the biggest beneficiary. |
| “The problem in Europe is that we are not alone, so this is not the agreement I wanted,” Mr. Hollande said. But he described the deal as “the best possible under current constraints and circumstances.” | “The problem in Europe is that we are not alone, so this is not the agreement I wanted,” Mr. Hollande said. But he described the deal as “the best possible under current constraints and circumstances.” |
| Some of the deepest cuts from initial proposals by the European Commission were made to a Pan-European project called the Connecting Europe Facility, which aims to improve transport, energy and digital services. And about 1 billion euros in cuts came from the part of the budget used to employ 55,000 people, including 6,000 translators, most of them in Brussels, who run the bloc’s day-to-day affairs. | Some of the deepest cuts from initial proposals by the European Commission were made to a Pan-European project called the Connecting Europe Facility, which aims to improve transport, energy and digital services. And about 1 billion euros in cuts came from the part of the budget used to employ 55,000 people, including 6,000 translators, most of them in Brussels, who run the bloc’s day-to-day affairs. |
| Herman Van Rompuy, president of the European Council, which organizes summit meetings, is already seeking to head off a parliamentary showdown over the budget. At a news conference on Friday, Mr. Van Rompuy sought to assure Parliament that enough flexibility would be built into the budget to ensure that member states paid all of their bills on time. | Herman Van Rompuy, president of the European Council, which organizes summit meetings, is already seeking to head off a parliamentary showdown over the budget. At a news conference on Friday, Mr. Van Rompuy sought to assure Parliament that enough flexibility would be built into the budget to ensure that member states paid all of their bills on time. |
| Mr. Van Rompuy warned Parliament that it should make sure it “reflects carefully” before rejecting the budget, “because for the population, for businesses, for jobs, jobs for young people, for prosperity, there is a great deal at stake,” he said. | Mr. Van Rompuy warned Parliament that it should make sure it “reflects carefully” before rejecting the budget, “because for the population, for businesses, for jobs, jobs for young people, for prosperity, there is a great deal at stake,” he said. |
| But national interests were on parade. Among the leaders playing most assiduously to a home audience was David Cameron, the British prime minister. He appeared to have delivered on his pledge to reduce the total amount of upfront cash payments by countries like Britain, a net contributor to the European Union budget. | But national interests were on parade. Among the leaders playing most assiduously to a home audience was David Cameron, the British prime minister. He appeared to have delivered on his pledge to reduce the total amount of upfront cash payments by countries like Britain, a net contributor to the European Union budget. |
| Mr. Cameron declared Friday’s outcome “a good deal for Britain and a good deal for Europe.” But he devoted much of a postsummit news conference to boasting about his steadfast defense of British interests, particularly a multibillion-dollar rebate that Britain receives each year on its payments. “I battled off every attempt to change it in any way,” he said. | Mr. Cameron declared Friday’s outcome “a good deal for Britain and a good deal for Europe.” But he devoted much of a postsummit news conference to boasting about his steadfast defense of British interests, particularly a multibillion-dollar rebate that Britain receives each year on its payments. “I battled off every attempt to change it in any way,” he said. |
| Mr. Cameron faces a domestic political challenge from a small but noisy and fiercely anti-European Union political party, the UK Independence Party. Last month he announced that if he won the next election, he would let Britons vote in a referendum on pulling out of the bloc. | Mr. Cameron faces a domestic political challenge from a small but noisy and fiercely anti-European Union political party, the UK Independence Party. Last month he announced that if he won the next election, he would let Britons vote in a referendum on pulling out of the bloc. |
| His domestic political calculations are replicated across Europe. Leaders in each country face a host of parochial pressures that matter little beyond their nations’ borders but on which their own political futures hinge. | His domestic political calculations are replicated across Europe. Leaders in each country face a host of parochial pressures that matter little beyond their nations’ borders but on which their own political futures hinge. |
| In the Baltic nations, for example, farmers are furious that a system of cash payments to support agriculture is skewed in favor of farmers from richer countries like France and the Netherlands. | In the Baltic nations, for example, farmers are furious that a system of cash payments to support agriculture is skewed in favor of farmers from richer countries like France and the Netherlands. |
| Latvian farmers say they get less than 40 percent of the European Union’s average payment level for each acre of land. Dairy farmers say they fare even worse, getting just 20 percent of what their Dutch counterparts receive. | Latvian farmers say they get less than 40 percent of the European Union’s average payment level for each acre of land. Dairy farmers say they fare even worse, getting just 20 percent of what their Dutch counterparts receive. |
| “This is a big issue for us,” said Mr. Dombrovskis, the prime minister. “It is a big political issue in Latvia.” | “This is a big issue for us,” said Mr. Dombrovskis, the prime minister. “It is a big political issue in Latvia.” |
| The agreement reached Friday does not alter this discrepancy. But it does enshrine a previous pledge to narrow the gap considerably by 2020, and it opens the way for national governments to provide additional subsidies of their own — something generally not allowed under current European Union rules governing agriculture. | The agreement reached Friday does not alter this discrepancy. But it does enshrine a previous pledge to narrow the gap considerably by 2020, and it opens the way for national governments to provide additional subsidies of their own — something generally not allowed under current European Union rules governing agriculture. |
| “I wouldn’t say I’m happy,” Mr. Dombrovskis said, “but we agreed.” | “I wouldn’t say I’m happy,” Mr. Dombrovskis said, “but we agreed.” |
This article has been revised to reflect the following correction: | This article has been revised to reflect the following correction: |
| Correction: February 8, 2013 | Correction: February 8, 2013 |
An earlier version of this article misspelled, on one reference, the last name of the Latvian prime minister. It is Dombrovskis, not Domobrovskis. | An earlier version of this article misspelled, on one reference, the last name of the Latvian prime minister. It is Dombrovskis, not Domobrovskis. |