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EU budget in limbo after nations refuse to pay 2012 bills

Martin Schulz/AFP.
 BRUSSELS, Nov 14 (LETA--AFP) - Tough talks on next year's European Union budget collapsed Tuesday when the European parliament refused to sit at the negotiating table with governments refusing to pay this year's bills.
At the center of the row was nine billion euros worth of unpaid 2012 bills covering a range of worthwhile causes - Europe's Erasmus student exchange program, research funds, humanitarian aid and cash for rural development.
The dispute between have and have-not states also bodes badly for the fate of a key summit days away on the bloc's even more hotly contested longer term budget for 2014-2020.
"If they can't agree to pay the bills, what can they agree to?" said lawmaker Hannes Swoboda, who heads the parliament's socialist group. The one exception was an agreement to dish out 670 million euros set aside to compensate Italian earthquake victims.
In a statement issued three hours before EU budget ministers were to go into talks on the 2013 budget, the parliament refused to attend on grounds that EU nations were depriving Europe's needy of key funds and failing to honor commitments.
"These funds are needed for the European Union to respect its legal obligations, that is to pay for bills incurred for goods, works and services delivered," said the parliament's president Martin Schulz.
The EU executive, the European Commission, will now have to draw up a new 2013 budget proposal and seek an agreement on it by year's end.
Tuesday's quarrel sets the scene for next week's November 22-23 summit, likely to turn into an ugly showdown presenting a bitterly divided Europe, torn between older wealthier states and poorer members on its southern and eastern fringe.
On Tuesday, battle-lines took shape as Britain's premier David Cameron, self-styled leader of the toughest-talking cost-cutters in the EU camp, flew to the Netherlands and Italy to rustle up support from leaders Mark Rutte and Mario Monti ahead of the summit.
In Brussels meanwhile, 15 heads of state and government from the opposite camp flew in to set a pre-summit agenda of what is termed the "Friends of Cohesion" group.
The EU's Cohesion funds, the second biggest item on the bloc's budget after the Common Agricultural Policy, aim to help Europe's poorer nations catch up with others, economically and socially.
Members of the Friends of Cohesion are net recipients of the EU's near trillion-euro budget.
Chaired by Poland and Portugal, the group includes Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Romania, Slovakia, Slovenia - and most recently, Spain.
Their opponents, eight of the 11 net contributors, want a 100-billion cut from on the European Commission's proposed 1.03-trillion budget for 2014-20, which is a 5 percent from the current one.
They argue that when many member nations are being forced to make cutbacks that the EU budget should also be cut back in real terms.
The group includes Austria, Britain, Denmark, France, Finland, Germany, Netherlands and Sweden.
At worst, they appear ready to settle for a real term freeze in spending.
Net contributors Belgium, Luxembourg and Italy are refusing to take sides as is Ireland, which is a net recipient but is remaining aloof as it takes over the EU presidency in January.
For 2013, the European Commission and European Parliament were seeking a 6.8-percent increase - or EUR 9 billion - to EUR 138 billion to bolster growth and jobs in the slowing economy.
The Commission, the EU's executive arm, argues the lack of budget deal will seriously undercut any chance for economic growth, worsening the very problems such countries say must be fixed through more belt-tightening.
If there is no agreement on the 2013 budget, the EU would base its spending for next year on the 2012 program, rolled over on a monthly basis.
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