EU deeper in crisis after summit budget failure

Swiss Info ^ | June 18, 2005 | Mark John

[RobFromGa]

EU deeper in crisis after summit budget failure

 

swissinfo

June 18, 2005 1:05 PM

 

EU deeper in crisis after summit budget failure   By Mark John and John Chalmers BRUSSELS (Reuters) - The European Union was plunged deeper into crisis on Saturday after its leaders failed to agree on a long-term budget, two weeks after French and Dutch voters rejected a proposed EU constitution. The summit breakdown threatens the enlarged 25-nation bloc with financial paralysis on top of the political uncertainty wrought by the double referendum defeats, unnerving financial markets and weakening the euro, the EU's single currency. In a welter of recrimination, many leaders blamed Britain for blocking a deal on the 2007-2013 budget by rejecting proposals to limit its annual rebate from EU coffers and demanding a reform of farm subsidies that benefit France most. "Europe is in a deep crisis," French President Jacques Chirac told a midnight news conference, blaming "the selfishness of two or three rich countries" for the failure. Luxembourg Prime Minister Jean-Claude Juncker, who laboured to forge a compromise as EU president, said he was ashamed that poor new members from eastern Europe had offered to sacrifice some funds from Brussels in a vain effort to salvage a deal. The failure would weaken Europe in the long term and sharpen a clash of philosophies between believers in European unity and those who sought a glorified free-trade area, he said. German Chancellor Gerhard Schroeder blamed British and Dutch obduracy for what he called "one of the worst crises Europe has known." But British Prime Minister Tony Blair was defiant, insisting London had not been isolated since four other west European countries had opposed the deal, and vowing he would only trade a reduction in the rebate for an overhaul of EU farm spending. Asked if others had tried to isolate him, Blair said: "If that was the attempt, it failed. We weren't alone around the table in resisting this." Blair's foreign secretary, Jack Straw, said later: "It's essentially a division between whether you want a European Union that is able to cope with the future or whether you want a European Union that is trapped in the past. It is not one that Europe can dodge." FRANCO-BRITISH FEUD The Netherlands, Sweden and Finland also rejected the final compromise, seeking a bigger cut in their net contributions. Spain sought a longer phase-out of aid for its poor regions. Blair rejected a series of proposals to cap Britain's refund, won in 1984 by Margaret Thatcher, insisting any cuts must be linked to reform of the Common Agricultural Policy. The Franco-British feud over the EU budget and farm spending has blighted EU politics for a generation. Britain, with few farmers, obtained the rebate when it was poor and agricultural spending made up nearly 75 percent of the budget. It is now among the richest EU states and farm subsidies are down to 43 percent of the total. Chirac rejected any linkage between the rebate and farm spending, saying: "The future of the British check after 2013 should under no circumstances be linked to a reform of farm expenditure." In a dramatic last-minute gesture, 10 mainly ex-communist east European states offered to forego some of the EU aid they are due to receive to avert a deadlock that will delay urgently needed public investment in their countries. "It was in our interest to reach an early compromise, it was in the interest of all new member states," said Polish Prime Minister Marek Belka, who led the east European initiative. "My proposal was a reaction to what I perceived as the selfishness of some member states. I asked, is it all about money, if so how much?" said Belka. Chirac said it was "pathetic" the poor countries had to offer sacrifices, but Blair said it was not a question of money but a matter of basic reform of the way EU funds are spent. Slovenian Prime Minister Janez Jansa said the budget fight showed the "new Europe which emerged from expansion was not being seriously considered by the old EU members." He noted efforts to forge a compromise by Juncker had faced "a significant dose of egoism," which was why the talks failed. The failure means Blair will inherit the EU presidency for six months on July 1 accused of torpedoing the budget talks, even by some in the "new Europe" whose accession he championed. TIME ON BLAIR'S SIDE? But Swedish Prime Minister Goran Persson said Blair was in a strong position to drive the reform agenda in Europe, whereas time was not on Chirac's side. The French newspaper Liberation noted Chirac thought he had isolated Blair but said the British prime minister had turned the tables on him by demanding a review of the whole budget. "It was supposed to have been he (Blair) who made the summit fail, but he comes out as the reformer," Liberation said. German opposition leader Angela Merkel, expected to replace Schroeder in a September election, has voiced greater sympathy for free-market British views and criticized the Berlin government for failing to press France on farm reform. While the European Commission said failure to agree on the future budget would throw EU financial planning into disarray, British, Dutch and Swedish officials insisted there was no rush. The leaders earlier decided to put the EU constitution into the deep freeze, extending the deadline for ratification into mid-2007 to avoid more humiliating referendum defeats. Denmark, Portugal and Ireland immediately said they would postpone votes planned later this year. The charter was framed to enable an enlarged Union to work more effectively, with a stable leadership and streamlined decision-making. But the EU will now limp on for years under the cumbersome Nice Treaty, widely seen as a recipe for paralysis.

[RobFromGa]

needs a europe ping...

[RobFromGa]

"Europe is in a deep crisis," French President Jacques Chirac told a midnight news conference, blaming "the selfishness of two or three rich countries" for the failure.

It's always someone else's fault.

[RobFromGa]

Good to see Tony Blair stick up for Britain.

[Red Sea Swimmer]

Gee those poor Eurocrats just might have to get a normal job. You never hear much about the average working man of the European countries. But it seems like they are voting against the Euro elites malevolent machinations in full force now.

[Guillermo]

This isn't a "crisis for Europe."

This is a crisis for EuroCRATS.

It's a crisis to those who would destroy any semblance of nationalism and soverignty, and those unelected who wish to subjugate populations.

[RobFromGa]

Budget wrangling adds to disharmony among EU nations

Published June 18, 2005

BRUSSELS -- The leaders of 25 European countries on Friday failed to agree on how to spend billions of dollars in their annual budget, dealing a final blow to a troubled summit and casting the continental alliance into a murky future.

The summit deadlocked in bitter dispute over subsidies, rebates and financial aid. An afternoon of arm-twisting by senior European Union officials did little to persuade countries, in the words of German Chancellor Gerhard Schroeder, to make a sacrifice and forge a compromise.

"Europe is not in a state of crisis, it is in a state of profound crisis,"

said Jean-Claude Juncker, the prime minister of Luxembourg, whose country, as rotating president of the EU, headed the summit.

At a news conference early Saturday, Juncker described a negotiation "in millimeters." Seemingly every country raised objections to the 2007-13 budget, divided over whether the alliance should be an integrated political entity or simply a free-trade zone.

"I'm sad and ashamed, to a certain extent," Juncker said, condemning countries for their lack of political will and lamenting that poorer countries seemed more willing to make sacrifices than their richer partners. "In a way, we go back to square one."

Reaching agreement on the budget, worth $120 billion a year, was seen as an important test of the ability of the European Union to show that its members still can work together after major political setbacks in recent weeks.

Voters in France and the Netherlands soundly rejected the union's vaunted constitution, an elaborate document meant to streamline the EU's decision-making system and consolidate its influence on the world stage. Instead, the leaders found themselves forced on the first day of their summit to abandon the goal of continent-wide approval of the document by 2006.

The most acrimonious point involved Britain and France.

All the other countries represented opposed British Prime Minister Tony Blair's insistence on clinging to the rebate his country receives. Under an agreement reached two decades ago, when Britain was a poorer partner, the EU refunds to London an amount now worth nearly $6 billion a year.

Blair said he would consider reducing the rebate only if agricultural subsidies, which account for nearly half the EU budget and which benefit France disproportionately, were overhauled.

French Prime Minister Jacques Chirac refused to consider the suggestion, and on this point the talks collapsed.

But that wasn't the only battle.

Spain and Italy objected to proposals by the EU executive committee to take away funds designated for their impoverished southern regions, redirecting that money to poor, mostly eastern bloc countries that joined the EU last year.

Sweden and the Netherlands, the highest per-capita contributor to the EU budget, demanded their tithes be reduced. Other countries disagreed on the sizes of caps that should be put on EU spending.

[Chgogal]

"German Chancellor Gerhard Schroeder blamed British and Dutch obduracy for what he called "one of the worst crises Europe has known."

ROFLMAO

Aufwiedersehen, mien lieber Herr!

[RobFromGa]

This isn't a "crisis for Europe." ... This is a crisis for EuroCRATS.

Agreed. This is actually the best thing that could happen for a Free Europe.

[Red Sea Swimmer]

Some things have to be destroyed for other things to take their place.

[Caipirabob]

Chirac has soiled his bed and now he gets to sleep between the sheets.

Britain doesn't want anything further to do with subsidizing French romanticist concepts of a 35 hour work week and time spent sipping coffee along the Seine while their economy implodes due to superior countries outperforming them.

It's bad enough the Britain already pays 2.5 times as much as France does into the EU fund. Now France want them to pay 15 times as much to pay for farming/vineyard subsidies because no one in the West wants to drink their pathetic "Frog Water" anymore.

Blair has been a true friend to us in our need. I'm further impressed that he has resisted embracing further socialist EU policy by rejecting the disgusting mewling of the gauls to pay even more for their failures as a country and as a people.

I hope these times serve to reignite a surge of common sense in continental Europe. The EU is a socialist disaster of French proportions. They all need to wake up before it's too late. It may be already....

[RobFromGa]

[Red Sea Swimmer]

Good graph. The whole thing about European integration being necessary to increase the general welfare of the various nations population is a fraud. Norway does very well by itself. The other nations, (excluding the micro-states of Luxembourg, Lichtenstein, Andorra, San Marino and Monaco) could do well if they were managed properly.

There seems to be almost an induced fear in the populations, especially of continental Europe, to assert their national identity and to be proud of their nation. Whether this has been a planned thing by various malevolent forces, or it is self-imposed, I'm not sure.

How boring the world would be if we were all the same. By that I mean, we can share similar basic values, but to erode the culture of a nation is terribly wrong and counter-productive.

[RobFromGa]

EU Reactions: Disappointment, Frustration, Blame

Recriminations flew fast and furious following the EU budget meltdown Friday, with the harshest words reserved for British Prime Minister Tony Blair. Read what EU leaders had to say about the crisis.

EU Council President: Jean-Claude Juncker

Responding to the offer from the 10 newcomer states to dig deeper into their own pockets for the sake of rescuing the compromise: "When I heard one after the other, all the new member countries, each poorer than the other, say that in the interest of reaching an agreement they would be ready to renounce some of their financial demands, I was ashamed."

On the future of budget talks: "During this budgetary debate there were two conceptions of Europe that clashed and will always clash. There are those who, in fact without saying it, want the big market and nothing but the big market, a high level free trade zone, and those that want a politically integrated Europe. … I have felt for a long time this debate would blow up one day."

Regarding Britain's Tony Blair who takes over the EU Presidency in two weeks: "No comment. No opinion. No advice"

On Europe's future: "My enthusiasm for Europe is crushed."

German Chancellor Gerhard Schröder

Speaking at a news briefing on what could have been achieved for the 2007-2013 budget: "With the goodwill of everyone, I believe a deal would have been possible. … We have not succeeded in reaching agreement, even though a deal would have sent an important signal regarding the ability of the EU to act."

On what went wrong: "The fact that there was no deal is due solely to the completely inflexible stance of the British and the Dutch… Britain in particular had not been prepared to compromise on its budget rebate. … With this, Britain refused to make its contribution to enlargement. That's regrettable."

"It is not a good day for Europe. A piece has been lost from Europe as a political union. That makes me sad."

"Europe has not emerged a winner, and that's putting it very carefully."

On the role of the 10 new member states and their willingness to hold back their own demands: "There is a bright spot that shines in Europe and it will light up others."

French President Jacques Chirac

"Europe is in a deep crisis," Chirac told a midnight news conference, blaming "the selfishness of two or three rich countries" for the failure.

On the efforts of the 10 new members: "It was very impressive compared to the egoistic position of one or two rich countries."

Speaking on Britain's role in the debate: "He (Blair) wanted to keep the entirety of his check (the British rebate). … I deplore the fact that the United Kingdom refused to contribute a reasonable and equitable share of the expenses of enlargement."

Summarizing the summit:

"A very bad outcome for Europe."

British Prime Minister Tony Blair

Reason for rejecting the budget compromise: "It doesn't reflect the Europe we need in the 21st century."

Defending Britain's position: "We were not alone at the (summit) table."

"I think people know exactly what the issues are here and I don't think they are fooled by the tactics and the maneuvers. … I hope we can move forward from here."

Blair's foreign secretary, Jack Straw on the crux of the debate: "It's essentially a division between whether you want a European Union that is able to cope with the future or whether you want a European Union that is trapped in the past. It is not one that Europe can dodge."

Polish Prime Minister Marek Belka

Leading the initiative of the 10 member states: "It was in our interest to reach an early compromise, it was in the interest of all new member states.

On the role of the bigger members: "My proposal was a reaction to what I perceived as the selfishness of some member states. I asked, is it all about money, if so how much?"

"The fact that we don not have a budget is not disturbing. What is disturbing is the atmosphere in the EU."

Slovenian Prime Minister Janez Jansa

The budget fight showed the "new Europe which emerged from expansion was not being seriously considered by the old EU members."

Czech Prime Minister Jiri Paroubek

"It is ridiculous and disappointing and for us new EU members absolutely incomprehensible."

[bill1952]

Strangely, I don't read how it's Bush's fault.

[RobFromGa]

"My enthusiasm for Europe is crushed."

EU Council President: Jean-Claude Juncker

Kind of says it all.

[greasepaint]

Simple solution to this.
Ditch the EU.

[jdm]

"German Chancellor Gerhard Schroeder blamed British and Dutch obduracy for what he called "one of the worst crises Europe has known."

German unemployment is at its highest level since the 1930s. Whose fault is that? Britain's? Oh, no, wait..... don't tell me..... Bush's?!

[demlosers]

What idiots.

[kidd]

"Europe is in a deep crisis," French President Jacques Chirac told a midnight news conference

No it isn't you filthy frog. France is in trouble and it no longer can get the other European countries to offset its problems.

[DoughtyOne]

Here's a "Cry me a river..." EU/PU bump...

[moose2004]

Why do Chirac and Schroeder constantly criticize and slander English speaking countries, bigotry of the worst kind perhaps?

[RobFromGa]

This EU mess is because there are Red States and Blue States over there too. If we weren't already joined, there is no way Red States and Blue States in the US could come together as one country today.

[phoenix_004]

Who gives a damn about europe anymore???Europe is for the historians!!!!

[sd-joe]

There is something weird about the EU, the president of which, is the ruler of Luxembourg a "country" that is about as big as a US CITY. (and not one of the biggest cities either, like about the 40th US city in size by population).

It would be like the mayor of Sacramento CA being the rotating president of the United States.

And these guys have such a high self image of their importance in the universe.

[nairBResal]

Blair: "It doesn't reflect the Europe we need in the 21st century."

Rumsfeld: "OLD EUROPE"

[Grampa Dave]

We can hear the catchy tune of "Regime Change" spreading across France/Germany and Eurotrash land.

[Chgogal]

I just love "Old Europe" whining and twisting in the wind as the "Anglo-Saxon" Euro economies position themselves for dominance.

[steveegg]

That'll put a nice little dent on $ora$$' Euro-centric investing.

[bayourod]

Iraq is a tremendous success compared to Europe.

Are we losing the war in Europe because there is still resistence from scattered factions?

[gcruse]

EU Constitution in PVS

European Union leaders bowed to the inevitable last night by sending the proposed constitution into an insulin induced coma. 

The EU summit in Brussels considered submersing the hapless 475+ page exercise in obsessive compulsion into a liquid nitrogen tank, freezing it after its rejection in France and the Netherlands, hoping to revive it with a therapeutic "pause for reflection" after reports that the document's provisions appear to "follow you about the room."

This "cryo-me-a-river-genics" was rejected in committee when consensus failed around the issue of whether to use Celsius or the new common market temperature gradient, degrees of Moribund.

The EU summit in Brussels eventually decreed the constitution to be in a state of Persistent Voter Scorn amid concern that "no" votes in more referenda could inflict further derision on the brain-damaged project.

But amid confusion over how the EU should respond to the crisis, the summit could not agree on whether to pronounce the proposed treaty dead or on how long any "period of reflection" should last before pulling its funding tube.

Supporters believe that any chance of voters "waking up" suffices for indefinite funding, while opponents see ongoing degradation in the polls as a sign that the "frognosis" of irreversible socialism goes against the wishes of the EU founding partners. Supporters further insist the founding partners be allowed to take the document home and massage the constitution until either dreaded capitalism sets in or political pandering kills off the administrations of the prodigal nations.

[Excuse_My_Bellicosity]

Budget failure, constitution failure, character failure. The Euros are a day late and a dollar short in life.

[Grampa Dave]

$oreA$$ was probably out of the Euros. I think he got out the week before our election when the polls he paid for showed a big GW win.

However, his slower moving elite liberal buddy, the Whoreacol from Omaha apparently got hammered with his shorting the $ and long on the Euro tactic.

[Excuse_My_Bellicosity]

"German Chancellor Gerhard Schroeder blamed British and Dutch obduracy for what he called "one of the worst crises Europe has known."

This is only a crisis for the Euro-socialists. In the 20th century, over 50 million Europeans died in two world wars, but THIS is the worst thing that has ever happened.

[steveegg]

That, of course, assumes that $orea$$' smarts outweighs his political bent (personally, I don't thikn he's THAT smart).

Now, what does a quick-reacting investor short besides the Euro (which, in a not-so-politicized world would already have been back to the $0.80 range based on the economics of Europe)?

[jveritas]

EU is nothing but a socialist delusion to oppose the United States economically, politically, militarily and culturally. Of course EU goes against every thing that History have taught us which is no union can exist between people with different nationalities, different languages, different cultures, and different history. Those who argues that the United States is made of such a union are pure ignorant if not stupid. The United States was founded by anglo-saxon people and the tens of millions of immigrants from different countries who came after that were melted in the American culture, spoke English, and became with one nationality "American". There is no such thing in socialist EU. Every country in this failing union speaks different language, has different history, has very strong nationalistic feelings, and each want to milk the EU to its best interest. And not to forget the fight between the big four, Germany, Britain, France and Italy and who is going to have the most influence on EU politics and leadership.

Socialist EU will cease to exist in 10 years.

[ArmedNReady]

Have they scheduled a funeral date yet for the EU?

[steveegg]

Not to mention Hannibal, the Moors, the entirety of the Dark Ages, the Plague, various wars between the Middle Ages and the 20th Century, Napoleon, and the Cold War (and that's not even close to a complete list). Old Blowhard Schroeder didn't just limit his comments to the 20th Century.

[steveegg]

Good analysis, even if you give Italy too much credit (seems it's about that time of the quarter for them to change their government :-)

[jveritas]

No wonder why the Spaniards voted for the EU constitution, they are netting around +9 billions euros a year from the EU.

[jveritas]

I always prefer to talk about the red counties and the blue counties because even in the majority of blue states the majority of the counties are red as the 2000 and 2004 elections have shown. That is why the left cannot win a national election ever again.

[Excuse_My_Bellicosity]

Very true. It just goes to show where he prioritizes the lives of millions of people. This guy probably puts his social schedule and buffet ahead of the lives of his constituents.

[uscabjd]

Givers and takers from what?

[Ernest_at_the_Beach]

However, his slower moving elite liberal buddy, the Whoreacol from Omaha apparently got hammered with his shorting the $ and long on the Euro tactic.

Serves him right!

[Redmen4ever]

Germany and Holland are the big losers in the EU re-distribution scheme. The U.K. has a special deal, negotiated by Margaret Thatcher, back when that country was relatively poor. Nowadays, following Thatcher's reform of the British economy, Britian is relatively rich. Except for the special deal it gets, Britian would also be a big loser. Furthermore, with the entry of several eastern European countries into the EU, the burden on the richer countries, and the subsidies to the relatively poor countries will get bigger. This might not be so bad if all the countries were liberalizing their economies, as Estonia, Ireland and Poland have done, so that productivity, income and wealth would tend toward convergence. But, increasingly, the effect of EU equalization is to tax the more free and productive in Europe in order to maintain democratic socialism elsewhere.

[Liz]

......the Whoreacol from Omaha apparently got hammered with his shorting the $ and long on the Euro tactic.....>

Man, I love to get good news.

[steveegg]

Have they scheduled a funeral date yet for the EU?

Not quite yet; it depends on whether Hitlery or another DemonRAT wins in '08 (in which case, the pEU dies in 2011 after 3 years of rearming by the Islamokazis).

[ArmedNReady]

"it depends on whether Hitlery or another DemonRAT wins in '08 "

Unfortunately, unless there are some significant changes in the actions of the Bush administration, the fact that Bush has ignored/facilitated illegal immigration/border security; the fact that Bush has kissed islam's ass; that Bush has not allowed the military to achieve a decisive win in Afghanistan and Iraq; and that Bush has pushed out-of-control spending, the chances of a Republican being elected in '08 are about zero. A president can either be effective or politically correct. Trying to be both gets nowhere.