|Luxembourg PM Jean-Claude Juncker|
Luxembourg prime minister, Jean-Claude Juncker, whose country holds the EU presidency, said Luxembourg's proposed compromise is a good solution that will not dash the hopes of new member countries and not overburden the old ones. He warned that without an agreement Europe risks getting bogged down in a long-term crisis.
The 25-nation EU must channel money to the 10 new members that entered last year. Wealthy countries like Germany, which are big contributors to the budget, do not want to pay more. Less wealthy nations, like Spain and Portugal, that receive substantial money from the EU, do not want cuts. Britain, which receives a large rebate from its EU payments, does not want to lose the rebate.
Austrian finance minister Karl-Heinz Grasser says the EU has an opportunity to make reforms and become more competitive on the world stage.
"We have a lot of chances within the European Union and we should use those chances,” Mr. Grasser said. “I think we must go on with consolidation on the one hand, and with structural reforms on the other hand, to be competitive with the United States and with Asia, on the other hand. And I think we are on a good way."
The budget period in question runs from 2007 to 2013.
Diplomats say there is a window of opportunity for a solution because Luxembourg is in a unique position to bargain. It is a small country of 450, 000, with little vested interest in the budget debate. Mr. Juncker also wins high praise as a political broker, for his skills to find compromise among many conflicting positions. They note that Britain has the next EU presidency, making a budget deal unlikely.