European parliament rejects bloc’s budget agreement
By JAMES KANTER
The New York Times | March 14,2013
A woman stands in an almost empty indoor food market in Madrid on Wednesday. Leaders and experts are coming round to the realization that, instead of helping, austerity has made it harder for governments to balance the books and pull themselves out of recession.
BRUSSELS — The lawmakers of the European Union gave austerity a poke in the eye Wednesday by overwhelmingly rejecting the bloc’s proposed budget of 960 billion euros in its current form.
EU leaders deadlocked over the seven-year plan in November but finally reached a deal last month after a 24-hour marathon of talks that resulted in spending cuts for the first time in the union’s history.
Lawmakers at the European Parliament cast doubt on that plan Wednesday, casting 506 votes in favor of a resolution demanding significant changes to the way the money should be spent and the option to raise the overall sum in the coming years. There were 161 votes against the resolution and 23 abstentions.
The union’s budget — for farming, transportation and other infrastructure, and big research projects — amounts to about 1 percent of the bloc’s estimated gross domestic product over its seven-year span. But it involves furious horse-trading as leaders focus on getting the best deal for their own countries, rather than putting the emphasis on pan-European considerations.
The opposition from the Parliament, which was given the formal power to veto budgets under the Lisbon Treaty of 2009, presents a significant hurdle. As a result of the vote Wednesday, the governments of the union’s 27 member states must now work out another compromise — this time with Parliament. The process could take months.
“It was foreseeable that the European Parliament would refuse,” Martin Schulz, the president of the legislature, said at a news conference shortly after the vote. “We don’t want to see the European Union going in the direction of a deficit union.”
Schulz was referring to resistance by some national governments to allocating more money at the start of each year to ensure that projects are fully funded from 2014 to 2020, the period of the budget.
The Parliament’s resolution called on EU governments to settle their outstanding bills and to give scope to the Parliament and to EU governments to move funds among different areas of the budget to meet needs as they arise. That means money that might ordinarily go unspent would be spent, but without changing the overall budget figure.
But the resolution also called for a review of the budget with the possibility of increasing spending. Many members of Parliament said that raising the overall amount of the budget should be an option, particularly if the economic crisis now gripping the union tapered off. The decision about who would conduct the review is likely to be an important part of the negotiations in coming months.
Schulz said he would formally present the resolution voted on Wednesday to EU leaders when they gathered in Brussels for a two-day summit meeting on the bloc’s economy starting Thursday evening.
Austerity also could be a core topic at the meeting if leaders of countries such as Spain and France seek to emphasize the need for measures to support growth against calls by leaders of countries such as Germany and Finland for budgetary discipline.
Another focus of the meeting is expected to be Cyprus, the latest eurozone country to require a bailout.
The leaders of the 17 countries of the euro area will hold a separate meeting Thursday night that is to be attended by the newly elected center-right president of Cyprus, Nicos Anastasiades.
Then, on Friday, eurozone finance ministers are expected to assess ways of overcoming the remaining obstacles to a deal.