Last updated: February 8, 2013 8:06 pm

Cameron emerges EU budget talks victor

European Summit Brussels©EPA

If there was a moment when the shape of the EU’s next long-term budget began to reveal itself through a haze of spreadsheets and obscure jargon, it may have been Thursday afternoon about 4pm.

That was when a group of the summit’s most influential figures huddled in the private office of Herman Van Rompuy, the European Council president, waiting on another invitee.

David Cameron, the UK prime minister, Angela Merkel, the German chancellor, and José Manuel Barroso, European Commission president, were all there. But for more than an hour, François Hollande, the French president, refused to show up in spite of repeated entreaties.

By his absence, Mr Hollande sent an unambiguous message about his displeasure with the course of negotiations and confirmed that things were, unexpectedly, breaking Mr Cameron’s way.

When the deal was finally agreed – after more than 25 hours of frenzied bargaining – Mr Cameron emerged the principal victor in a €1,000bn contest that had played out in the corridors of Brussels and the Europe’s other capitals for more than 18 months.

Above all, he can claim to have won the first-ever reduction in EU spending – a trophy for a British Conservative premier – while defending the sacrosanct UK budget rebate negotiated by Margaret Thatcher when she was prime minister at a French-chaired summit in Fontainebleau in 1984.

Mr Cameron was not the only exhausted but content EU leader on Friday evening. Mr Van Rompuy, the wily former Belgian prime minister who presided over the negotiations, was able to deliver a deal that had something for everybody – and yet still cut spending – after his previous effort in November collapsed in failure.

One of Mr Van Rompuy’s chief tactics appeared to be sleep deprivation: the council president kept the summit going through the night, refusing to table his first comprise for 15 hours, and leaving some leaders, such as Hungary’s Viktor Orbán, visibly exhausted.

It is unlikely he would have succeeded without the intervention of Ms Merkel, who emerged as the broker in the talks and also won almost precisely the budget deal she wanted by throwing her weight behind the British premier rather than behind Mr Hollande, her traditional ally.

The chancellor had been determined to settle the budget before September’s German elections, and wanted a clear cap on German contributions. In spite of a determined defence of her own national interest, she also was credited with keeping the warring factions together.

“She’s important not only because Germany’s big, but because she’s the middle here,” one Van Rompuy aide said. “She’s almost the centre of gravity.”

The final compromise fell almost precisely on the lines that Berlin had set out months ago, by setting the spending ceiling at 1 per cent of EU gross national income, or €960bn. (The package also includes a further €37bn in off-budget items). That was more generous and more flexible than Mr Cameron wanted.

After agreement was reach on Friday, the chancellor stressed her delight not just at having bagged a deal, but having one with the support of all member states.

“I can say that the effort was worth it,” she said. “It was right that we did not try to bang our heads against a wall [to reach agreement] in November. And now we have reached an agreement with all 27 which is important for the negotiations with the European Parliament.”

Just down the hall, Mr Hollande was defending himself against accusations from a hostile French press corp that he had caved in. “This agreement is not everything we could have hoped for, but it is in line with the commitments I made,” he said. “Is this my dream budget, the one I wanted if I was alone? No. But the thing with Europe is we’re not alone.”

Mr Hollande also issued a thinly-veiled threat to London that its hardline tactics might come back to haunt them, warning that Britain’s totemic rebate could be challenged by Paris in the future.

“The British cheque is in the treaty, so it remains unchanged,” Mr Hollande said. “The UK should keep that in mind when they want the treaty amended.”

Also sounding somewhat deflated was Mr Barroso. A €40bn fund he had proposed to pay for cross-border infrastructure projects, such as high-speed rail and broadband, suffered the bulk of the cuts – roughly €11bn – in the final round of bargaining.

The “connecting Europe” fund was billed as the sort of pan-EU spending that could deliver much-needed economic growth while contributing to the goal of further European integration.

Optimists noted that the fund, while reduced from Mr Barroso’s dreams, did not even exist in the current budget.

Similarly, officials noted spending on research and innovation, while lower than the Commission’s proposal, would still be almost 40 per cent higher than the current budget.

“The levels agreed today [Friday] by the heads of state and government are below what the Commission considers desirable, given the challenge of promoting growth and jobs across the EU in the coming years,” Mr Barroso told reporters, barely concealing his disappointment.

That was a fitting summary for a budget that improves on the current model, but – hemmed in by circumstances – falls short of the more radical reform many had sought.

Additional reporting by Peter Spiegel in Brussels

 

THE LOSERS

 

FRANÇOIS HOLLANDE: The French president acknowledged he agreed cuts more than €4bn below the floor he had set, but insisted flexibility to rollover unused funds annually – as well as securing €47.5bn for French farmers – made up for the concessions to Britain and Germany.

JOSÉ MANUEL BARROSO: The European Commission president put his weight behind growth initiatives in the budget draft he issued last year – particularly a “connecting Europe” fund to finance cross-border infrastructure – but saw the pot raided to pay for traditional agricultural and development spending.

PETR NECAS: Even as Poland – whose EU commissioner oversees budget issues – grabbed a windfall in development funds for poorer countries, Czechs found themselves with a deep cut. The final deal threw the Czech prime minister an extra €300m for rural development, but it still came up short.

MARTIN SHULZ: For the first time, the European parliament can veto Friday’s deal and its president said he would not tolerate a big gap between what countries paid and what they committed to spend. Leaders ignored his demand, but Mr Schulz may have the last laugh during the vote.

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