BRUSSELS — European Union leaders agreed Friday to a significantly reduced 7-year budget worth $1.28 trillion - the first cut in spending in the 27-country group’s history.
European Council President Herman Van Rompuy announced that the agreement had been reached after two days of nearly round-the clock negotiations - the longest negotiations of his tenure in office. The final total was about $40 billion less than the European Commission had originally proposed.
The issue of what to give to the EU was made more difficult because, he said, its members were struggling with poor economic growth and harsh austerity measures.
“We simply could not ignore the extremely difficult economic realities across Europe,” Van Rompuy told reporters. “It had to be a leaner budget.”
He said it would amount to 1 percent of the European Union’s gross national income.
The final number was far less than the $1.38 trillion the European Union’s executive arm, the European Commission, had originally proposed. The $1.28 trillion total will cover the years 2014-2020; the budget for the years 2007-2013 was $1.3 trillion.
The two-day fight over the cap on what the European Union can spend on everything from infrastructure to development aid laid bare divisions over what the role of the union should be.
“The effort was worth it,” said German Chancellor Angela Merkel. “The agreement is good and important,” she said, saying it would show solidarity and ensure predictability.
The European Parliament must still approve the deal - and lawmakers there suggested that the proposed cuts would be unacceptable.
“This agreement will not strengthen the competitiveness of the European economy but weaken it,” said a statement by the leaders of the four largest political groups in the Parliament. “It is not in the prime interest of our European citizens.”
The proposed budget has also been criticized for cutting too deeply into aid for poor countries and other programs critical for Europe.
The summit in Brussels was a tussle about what the 27-nation European Union stood for: some leaders argued it was a drag on national budgets in tough economic times, while others said the economic crisis highlighted the need for closer and deeper ties, which would compel the European Union to do more than in the past.
The deal that emerged seemed to lean more toward the position of countries led by Britain, which insisted that the European Union couldn’t look for more money at a time of belt-tightening across Europe.
“The UK public can be proud that we cut the ‘credit card level’ for the first time ever,” said British Prime Minister David Cameron. “I wanted a cut. That is what I achieved today. Working with allies, this is a great deal for Britain and a great deal for Europe. And a great deal for European taxpayers.”
Indeed, it seemed a loss for many of the newer - and generally poorer - members, who see Europe as a club that is only as strong as its weakest member. That group, led by Poland and France, argued that Europe meant nothing if the budget were not used to bridge the wealth gap between rich and poor members and help restart growth.
But French President Francois Hollande also claimed victory, taking a small dig at Britain by noting that Cameron had moved further from his government’s desired budget total than France had. More broadly, he sought to paint the agreement as a win for Europe, calling it a grand compromise that safeguarded important shared programs and values.
“If there was a loser, he could have blocked it,” Hollande said, referring to the fact that each of the 27 countries had the right to veto any agreement.
Both sides had threatened to walk away from the table - again - if they didn’t get what they wanted. The first summit to negotiate a budget collapsed in November.
The European Union, with a population of more than 500 million people and an annual gross domestic product of $16.05 trillion, is the world’s largest economy.
But the European Union’s budget for 2012 is $196.87 billion - less than one-fifth thesize of the budget of the U.K. alone.
Separate from the national budgets, it is designed in part to balance out the economic development of European Union members by injecting funding into poorer countries. The European Union has funded hundreds of thousands of infrastructure and capital projects over the years, from the installation of broadband network to upgrading road networks.
Information for this article was contributed by Raf Casert of The Associated Press.
Business, Pages 27 on 02/09/2013