The FINANCIAL -- Brussels hunkered down on
Thursday for what looked set to be a gruelling European Union summit
over a trillion-euro budget that has bitterly divided a 27-nation bloc
already mired in economic crisis.
Barbed-wire barriers sealed off much of the city's European district as national leaders from across the continent sped in for two days of talks aimed at finding a seemingly impossible compromise on the 2014-2020 budget.
Britain was the potential chief spoiler at the summit, with Prime Minister David Cameron threatening to wield his country's veto unless spending is frozen in real terms, arguing that at a time of austerity at home the EU must also make cuts.
Cameron was the first to arrive at the European Council building for one of the brief individual so-called "confessionals" which EU president Herman Van Rompuy will hold with each of the EU's 27 leaders ahead of the official evening opening of the summit.
Cameron was in fighting mood as he went into the meeting, telling reporters: "We're going to be negotiating very hard to get a good deal for the British taxpayers."
The Financial Times however reported on Thursday that Cameron, under constant pressure from eurosceptics in his Tory party to battle supposed European meddling and bureaucracy, was prepared to accept a 940-billion-euro spending ceiling.
He had initially vowed to settle only for a real-terms freeze from 2011 levels -- which Britain believes would be equivalent to 886 billion euros -- but could still claim he had won a budget cut if the new plan proceeds, the paper said.
Eight of the EU net contributor nations -- Austria, Britain, Denmark, France, Finland, Germany, Netherlands and Sweden -- have banded together to demand spending cuts, but they are far from being on the same page on what should be cut or by how much.
"All the talk is only about cuts," the head of the EU executive Jose Manuel Barroso lamented in an impassioned speech too the European parliament on Wednesday. "No one is discussing the quality of investments, it's all cut, cut, cut."
Much of Europe is in or dangerously close to recession and austerity-driven nations are demanding huge cuts in EU spending to match belt-tightening at home, raising the ire of cash-strapped nations to the east and south who benefit from the bloc's development funds.
Those so-called "cohesion funds" -- billions of euros outlayed each year to the EU's newer and poorer entrants so they may make up the economic lag with richer neighbours -- are central to the battle that is shaping up at the Brussels summit.
They will be defended tooth and nail by the 15 nations -- chaired by Poland and Portugal -- who are net beneficiaries of the EU budget.
The group includes Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Romania, Slovakia, Slovenia, and once mighty Spain, EUbusiness reports.
The cohesion funds are the second biggest budget item after spending on the Common Agricultural Policy (CAP), the farm and fishing subsidies which are another bone of contention.
France is by far the biggest beneficiary of the CAP, and French President Francois Hollande has vowed to fight to keep his country's prized agricultural subsidies.
Hollande this week lashed out at countries which defended budget rebates and discounts, the third hot-button issue that could send the budget summit off the rails.
He did not name any specific countries, but Britain in particular cherishes its budget rebate, which then prime minister Margaret Thatcher obtained in 1984 on the grounds that London was paying too much towards the bloc.
The British rebate was worth 3.6 billion euros last year, and Cameron vowed on Thursday when he arrived for the Brussels summit, which may continue long into the weekend if no deal is found, that he had no plans to give it up.
Germany, the Netherlands, Sweden and Austria are also demanding to keep their rebates and Denmark is seeking one too.
EU president Van Rompuy warned in his summit invitation letter to the EU's 27 leaders: "Let there be no mistake: the absence of an agreement would be harmful for all of us."
But German Chancellor Angela Merkel told lawmakers in Berlin on Wednesday she did not "know if we will have a definitive deal" by Friday.
"If necessary we will have to meet again at the beginning of next year," she said.