EU lawmakers reject $1.3 trillion budget proposal

Brussels: The European Parliament on Wednesday overwhelmingly rejected a proposal for the European Union`s USD 1.3 trillion budget, in the latest example of lawmakers` newfound resolve to stand up to the bloc`s national leaders.

"This is an important step for the European democracy," said European Parliament President Martin Schulz. The seven-year plan brokered at a summit of the 27 heads of state and government last month after two days of nearly round-the-clock negotiations did not address Parliament`s main demands that more be spent to foster economic growth and that there be flexibility to move money within the budget. For that reason, Schulz said, it had to be rejected. The leaders` proposal involved spending cuts for the first time in the EU`s history and would cement the bloc`s budget through 2020. "The vote has shown that the European Parliament must be taken seriously as a negotiating partner," Schulz said. "We are now ready to negotiate a fair multi-annual budget," he added. Crucially, lawmakers are also looking to add a legally binding review clause that would allow them to reopen and readjust the budget after next year`s European Parliament elections. The governments loathe that idea, fearing it might be a backdoor to higher spending. Government representatives and Parliament must now try to hammer out a compromise. Officials say they aim to finalise it before the summer. The powers of the Parliament the EU`s only directly elected institution were greatly expanded by the EU`s 2009 Lisbon treaty, and today`s showdown marked the first time the Parliament has had the right to block the multi-annual budget. The EU budget is separate from the national budgets of the member governments and is designed in part to balance out the economic development of the region by injecting funding into poorer countries. It includes significant funds for agricultural subsidies, but also for important infrastructure projects, research grants, diplomacy, and development aid around the world. In today`s vote, 506 of 690 lawmakers rejected the current budget proposal. If negotiations fail to yield a compromise before next year, the EU would have to operate under a provisional budget that would see spending slightly increasing but make long-term planning impossible. Funding for EU projects often spans several years. PTI