Britain under attack for EU budget breakdown

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Britain took a battering from Brussels on Tuesday, indirectly blamed, along with allies Holland and Sweden, for the collapse of talks on the European Union's 2011 budget.

"I regret that a small number of member states were not prepared to negotiate in a European spirit," European Commission president Jose Manuel Barroso said in a veiled attack on Britain and its partners.

Tough talks on how to spend billions over the next 12 month period broke down amid high political drama at the stroke of midnight Monday, leaving grandiose plans to project the bloc on the global stage hanging by a thread.

The failure was less over numbers than power, with the European Parliament determined to use the new powers it won with the Lisbon Treaty while austerity-driven governments such as London were equally wary of MEPs meddling in the EU pot.

The budget negotiations were the first since the Lisbon Treaty, finally adopted in December, handed parliament decision-making powers on a par with governments.

"Those that think they have won a victory over 'Brussels' have shot themselves in the foot," Barroso added in a terse statement issued after the midnight collapse. "They should know that they have dealt a blow to people all over Europe and in the developing world.

"This is not a budget for 'Brussels'. It is the beneficiaries of EU programmes -- citizens, businesses, towns, cities, regions and rural communities -- who will feel the impact of this failure to reach agreement."

Monday's talks, the last round of acrimonious negotiations between the European Parliament and member states, kicked off with an agreed figure already on the table -- a 2.91 percent increase on the EU's 2010 123-billion-euro (170-billion-dollar) budget.

To reach that compromise sum, parliament climbed down from its call for a six percent hike and British Prime Minister David Cameron backed off an earlier demand for no rise at all, after bringing his austerity crusade from London to Brussels.

But member states used to carving up power among themselves staunchly refused to cede to parliament's demands for a written agreement clearly giving lawmakers a say in determining budgets over the next decade.

Lawmakers say they have a direct mandate from half a billion citizens to exercise full oversight on how the EU raises and spends its money.

"We did not ask for one euro more than what the Council (of member states) was proposing," said European Parliament president Jerzy Buzek. "Parliament's only condition was to have a serious agreement on rules and procedures implementing the Lisbon Treaty to avoid future budgetary crises."

For the sceptics, the legislature's demands smack of a nightmare scenario of direct EU taxes encroaching on the ultimate sovereign right of states to raise tax.

States currently cough up three quarters of the EU's income and lawmakers argue that in times of austerity the bloc needs more flexibility in managing funds and must begin to mull new ways of raising cash.

The budget now goes back to the drawing board after high-profile lawmakers led by Buzek held out resolutely against their opponents.

French conservative Alain Lamassoure, a former minister who chairs the parliament's budget committee, said the assembly agreed the EU could not escape the austerity measures hitting national budgets across Europe.

But "at the same time, the seriousness of the budgetary crisis in all of Europe necessitates an in-depth reflection on the future financing of policies ... A reform of the system of own resources for the EU budget has become inevitable," he said.

The Commission said Tuesday it was already at work on a new budget which could be put to European leaders at a summit December 16 and 17.

For the moment, the EU's executive commission will be forced to plan for monthly budgets based on the 2010 figures.

Meanwhile, a key new EU diplomatic service launching on December 1, and new agencies due to supervise financial markets come January 1, will likely face a serious shortfall in initial funding.

© 2010 AFP

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