BRUSSELS (AP) - A battle of wills between a group of EU nations, including Britain, and the European parliament came to a head Tuesday, when talks over new budget rules collapsed due to those governments' reluctance to give up power in spending decisions.
The talks' failure means the EU will face a budget crunch early next year as agreement with states like Britain and the Netherlands - who want to contain the parliament's clout over budgetary policy and keep essential decision-making in their capitals - is not expected before the new year.
The EU will therefore start 2011 living off monthly allowances which cannot exceed the 2010 equivalent.
"Measures to boost economic growth and research and development in our member states will be delayed. This is highly regrettable," EU Budget Commissioner Janusz Lewandowski said.
The negotiations were ended despite agreement that the budget could only expand by 2.9 percent next year to match austerity efforts in member states.
The EU budget hovers around 130 billion ($178 billion) and is primarily used to fund agriculture and aid programs to the EU's poorer regions. Lewandowski insisted that some 90 percent of that budget boosted growth and jobs.
Beyond the monetary dispute, the budget quarrel has turned into a test of wills between the powers of the EU capitals and the EU institutions, touching on issues like national sovereignty and dominance of the EU.
Nations like Britain complained that the EU legislature was trying to introduce novel concepts on EU taxes into the discussion, issues so sensitive that London, often a reluctant EU partner, could never agree to it.
European Parliament President Jerzy Buzek said "the intransigence of a few member states ... undermines the confidence of our citizens." He already considered the legislature's original concession to step back from a 6.2 percent budget increase a huge step toward a compromise.
He said funding new tasks like the setting up of an EU diplomatic force was now in danger.
At an EU summit of government leaders last month, British Prime Minister David Cameron led a call from EU leaders to reject the increase in the EU's 2011 budget, insisting on moderation.
Cameron is pushing through deep cuts in British public spending totaling 81 billion pounds ($128 billion) to reduce its deficit. All other EU member nations are also curbing spending to meet the challenges of the financial crisis and ease the region's debt problems.
After the collapse of talks Tuesday, Lewandowski will now have to redraft new proposals. Those will have to be assessed by member states and parliaments and then be negotiated among the two, a process that should spill over into next year.