EU budget in limbo after row on 2012, 2013 spending

Tough negotiations on the European Union's 2012 budget looked headed for collapse Tuesday after the European parliament boycotted talks just days before a key summit on the EU's longer term budget. In a statement issued three hours before EU budget ministers were to go into talks on the 2013 budget, parliament refused to attend on grounds that EU nations had failed to plug an almost nine-billion-euro 2012 hole, depriving Europe's needy of key funds. "European parliament negotiators will not attend the meeting ... because there is no agreement among the member states about a supplementary budget for the current year," said parliament's president Martin Schulz. "These funds are needed for the European Union to respect its legal obligations, that is to pay for bills incurred for goods, works and services delivered," he added. The quarrel augurs badly for a November 22-23 summit to agree the bloc's even more hotly contested longterm budget for 2014-2020, and follows the collapse of budget talks last Friday over this year's 8.9-billion-euro ($11.3-billion) hole. Long expected to be the scene of a battle between the EU's older wealthier states and the poorer members on its southern and eastern fringes, next week's summit is increasingly shaping up to show a bitterly divided Europe. This year's shortfall threatens a wide range of social programmes, including the Erasmus student exchange scheme, which are currently out of cash. It also included 670 million euros set aside to compensate Italian earthquake victims. "The research programme, the European social fund, the rural development fund, humanitarian aid and Erasmus has been short of money for more than a month," said conservative French MEP Alain Lamassoure, who heads the assembly's budget committee. A spokesman for Cyprus, which currently holds the rotating EU presidency, said of the negotiations scheduled to begin at 1800 GMT that "for us the meeting is not lost. "We are trying to find a way to bring them back to the negotiating table," spokesman Nikos Christodoulides told AFP. "Conciliation ends at midnight." Ministers face a midnight deadline to overcome a row between the bloc's have and have-not nations that is holding up a deal on a budget for this year and next. On Tuesday, battle-lines took shape as Britain's premier David Cameron, self-styled leader of the toughest-talking cost-cutters in the EU camp, flew to the Netherlands and Italy to rustle up support from leaders Mark Rutte and Mario Monti ahead of the summit. Meanwhile in Brussels, 15 heads of state and government from the opposite camp flew in to set a pre-summit agenda of what is termed the "Friends of Cohesion" group. The EU's Cohesion funds, the second biggest item on the bloc's budget after the Common Agricultural Policy, aim to help Europe's poorer nations catch up with others, economically and socially. Members of the Friends of Cohesion are net recipients of the EU's near trillion-euro budget. Chaired by Poland and Portugal, the group includes Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Romania, Slovakia, Slovenia -- and most recently, Spain. Their opponents, eight of the 11 net contributors, want at best a 100-billion cut, at worst a freeze, on the European Commission's proposed 1.03-trillion budget for 2014-20, up 5.0 percent from the previous one. They include Austria, Britain, Denmark, France, Finland, Germany, Netherlands amd Sweden. Net contributors Belgium, Luxembourg and Italy are refusing to take sides as is Ireland, which is a net recipient but is remaining aloof as it takes over the EU presidency in January. For 2013, the European Commission and European Parliament are seeking a 6.8-percent increase -- or nine billion euros -- to 138 billion euros to bolster growth and jobs in the slowing economy. The Commission, the EU's executive arm, argues this will seriously undercut any chance for economic growth, worsening the very problems such countries say must be fixed through more belt-tightening. If there is no agreement on the 2013 budget, the EU would base its spending for next year on the 2012 programme, rolled over on a monthly basis.