Europe’s tortuous budget talks are set to spill over into Ireland’s incoming presidency of the EU in January, complicating the task facing the Government after two days of talks in Brussels ended in failure.
The breakdown followed deep divisions over a €1 trillion seven-year financial package and a British-led push for large cuts from administration expenditure.
Although there was no sense in diplomatic circles that this was a crisis, there was anxiety at the highest levels that the collapse would provide another example of EU leaders failing to settle their differences. The leaders have yet to confront unresolved debt-crisis questions over the enforcement of economic policy and the stalled “banking union”.
Private discussions
After several hours of fruitless talks, EU leaders asked European Council president Herman Van Rompuy to continue private discussions in the coming weeks with a view to reaching a deal early in the new year.
While a revised draft budget he tabled on Thursday left plenty of scope for further compromise in the future, summit insiders said the leaders were too far apart for the talks to continue.
With only a six-month window for the Government to pursue its presidency agenda, the lack of a deal will hinder one of its prime tasks: advancing 68 separate items of legislation to give effect to the budget. This is already a highly complex process, necessitating detailed talks with other governments and the European Parliament.
Even though Taoiseach Enda Kenny had said any failure to strike a deal would undermine the authority of the presidency, yesterday he said the Government would embrace the challenge. “What I was saying last night was that my preference would be to have it over and done with and that we could proceed on in Ireland’s presidency in dealing with the issues of reform in the sectors that arise from the budget.”
The talks were marked by a big play for budgetary restraint from London and efforts by German chancellor Angela Merkel to avoid isolating British prime minister David Cameron.
“Brussels continues to exist as if it is in a parallel universe,” Mr Cameron said. “More than 200 commission staff earn more than I do. Any EU staff not from Belgium get a 16 per cent expatriation allowance on top of their generous salaries, even if they have lived in Brussels for more than three decades.” However, European Commission chief José Manuel Barroso did not yield to pressure for more cuts to the administration budget.
Mr Barroso’s resistance was seen in diplomatic circles as a ploy to maintain the support of MEPs, who must approve any budget deal by an absolute majority. This is a source of potential trouble, particularly after parliament president Martin Schulz signalled opposition to any freezing of the overall budget or any reduction.
Germany and Britain were backed by countries such as Denmark, Sweden and the Netherlands but France and Italy led a pushback – supported by Ireland – against any deeper cuts to the agriculture budget.
Ongoing strain
In a signal of ongoing strain in Berlin’s traditional alliance with Paris, Dr Merkel is said to have publicly urged French president François Hollande to take account of Mr Cameron’s concerns. “I see, when I look at the complete picture of possible compromise, readiness on all sides and good possibilities to reach agreement,” she said.
