EU summit starts six hours late, as Germany piles on pressure
An EU summit on the bloc's seven-year budget kicked off at about 10pm local time in Brussels on Thursday (7 January) - six hours later than planned, after a series of mini-meetings between leaders, which failed to bring about agreement on an overall spending figure.
Initially, EU Council chief Herman Van Rompuy had planned to gather all 27 leaders plus the Croatian Prime Minister, due to join the club later this year, at 3pm to discuss a new proposal below the €972 billion floated at a previous budget summmit in November.
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But the plenary event was delayed time and again as leaders gathered in smaller groups in the margins, with no outcome.
An EU official said the overall figure is the "initial sticking point" on which Van Rompuy will try to seek agreement during the 10pm dinner, along with who pays what into the budget and what rebates high-paying member states will get.
"They're only a few billions apart. We are closer now than in November, it is going in the right direction," the source said.
The next step will be to go through each section of the budget, such as agriculture, funds for poorer regions and administrative costs, including the salaries of EU officials.
The negotiations are expected to last into the early hours of Friday.
Van Rompuy has said that he has no "plan b" in case of failure.
Meanwhile, Germany, which wants to cut the €972 billion figure from November, has changed tactics and is now contemplating what it calls the "second best option" of yearly EU budgets.
Up until Thursday, German Chancellor Angela Merkel has advocated a seven-year deal, saying it offers "predictability" and helps new member states' economies to catch up with richer ones.
But as leaders sat down to eat, a German official briefed press that since the talks are proving "very, very difficult" it is likely there will be no deal at all.
"There is a second best solution, an alternative we don't advocate, but an alternative we don't fear: yearly budgets," the official said.
Yearly budgets means taking the figure already agreed for 2013 (€151bn) as the basis for future talks on 2014 spending, with added uncertainty on future years.
Germany is in a good position if the scenario comes to be, because under EU Council voting rules it is big enough to block anything it does not like in the year-by-year talks.
"We are also not the main beneficiaries of the budget," the German official added, highlighting the fact that eastern and southern EU countries, which oppose cuts to the seven-year budget proposals, stand to lose more than Germany if there is no long term deal.
Asked if Italy's Prime Minister Mario Monti is holding up the talks because he is under pressure at home to deliver a good deal before general elections next month, the official said: "You can imagine there is quite a lot going on there."
Monti had earlier complained that Italy was the biggest net contributor to the EU budget in 2011 and said there must be a fairer balance among net donors.
As for the UK, which also wants deep cuts, the German official said it would be "factually incorrect" to blame it for the hold-ups.
"In November, Germany asked about €30 billion to be cut and the Dutch and Finns wanted even more than the Brits," the contact said.
"It is not one country against the rest of the world. Not at all. The UK is willing to compromise, the current figures are actually putting the UK in a worse position as a donor country," the source added.