Continental divide

Expectations are high. In November, the European Union heads of state failed to reach agreement on the EU's next seven-year budget. It was a very public disagreement.

Speaking to the European Parliament in a debate ahead of the next summit, which starts on Thursday (07.02.2013), the president of the European Commission, Jose Manuel Barroso, made an urgent appeal for unity. "Further delays would send out a very negative message at this time of fragile economic recovery," he said – the risk was that positions would only harden and agreement would be even harder.

But the lines of conflict have remained. The wealthier northern countries, like Germany, the Netherlands or Sweden, want more budget cuts. They argue that, when national governments are having to make savings, the EU budget can't be spared the pain.

The most radical position was taken by the British prime minister, David Cameron. He considered the compromise position worked out by the president of the European Council, Herman Van Roompuy, as by no means adequate. He also wants to maintain the British rebate on its payments into EU coffers. It's not the only country to get a rebate. Germany gets one too, and other countries want the same.

Split down the middle

Other countries turn the argument on its head. If the member countries are having to make such huge savings, leaving unemployment and misery in their wake, especially in the southern countries, the EU budget has to balance this out a bit. One of the leaders of this group is the French president, Francois Hollande.

"Savings, yes; weakening the economy, no!" he told the European Parliament. Most of its members agree with him. The leader of the Socialist group in the parliament, Hannes Swoboda, emphasizes, "It's a very, very small budget," by which he wishes to remind his listeners that the EU budget makes up only about 1 percent of the EU's Gross Domestic Product.

Many Christian Democrat Members of the European Parliament (MEPs) remind Christian Democrat national governments about the fine words on Europe their ministers are always spouting when they ask Europe to take over more responsibility, and then refuse Europe the money to do so.

The German Christian Democrat MEP Herbert Reul insists, "If you want to be careful with the money, you have to answer the question as to which tasks you are going to save on."

And the co-leader of the Greens, Rebecca Harms, is already certain that any savings will end up being made in those areas Europe needs for its future.

"They'll hit those who want innovation, sustainable development, more research, more education, more inclusion for unemployed young people," she said.

Two seats of parliament: 'this icon of profligacy'

There are only a few MEPs who openly speak out in favor of savings. One of them is Martin Callanan, head of the UK Conservative party group, who wants a fundamental rethink. Instead of just increasing the budget every time, the EU should make a "better" budget, and cut away "the enormous amount of fat," he said.

Callanan sees most of the EU's agricultural subsidies as fat – they make up some 40 percent of the budget. And there's the two seats of parliament. Every month it moves for a week from Brussels to Strasbourg – what Callanan calls "this icon of EU profligacy."

But, even before the summit, Jose Manuel Barroso is already sure that "unfortunately any agreement between the leaders will be less than what the commission and parliament had hoped for." The commission originally wanted a trillion euros – now it's down to between 950 and 970 billion.

Van Rompuy, who has had to mediate between the states, says now, not without pride, "For the first time there will be real cuts compared to the current budget."

Annual budgets are another option

But even if the leaders agree, they still have to get the parliament on board, since it has the final say over the seven-year budget. Most members agree with the commission that they would like to expand the budget. The EU Parliament's president, Martin Schulz, says clearly, "The further the [European] Council moves from the commission's figures, the more likely it is that the parliament rejects the compromise."

Guy Verhofstadt, head of the Liberal group, calls on his fellow MEPs not to let themselves be put under pressure or be "bought off" in the end.

One compromise could be that the budget could include elements of flexibility – for example, the possibility that it could be revised after three years if economic conditions change.

But what happens if there is no agreement in the end? Verhofstadt refuses to let himself be worried by that. The EU can continue to operate with annual uncut budgets at the level of 2013 until agreement is reached. He's in favor anyway of annual budgets, since that would increase the power of parliament. He says he's reminded of the Soviet Union with its five-year plans – it's worse in the EU, with seven years!

That was the only point in the debate when there was any laughter. Otherwise, there's not much to laugh about.