Spain faces sharp drop in EU funding

Prime Minister Jose Luis Rodriguez Zapatero faces a thorny political problem as the European Union prepares to turn off the tap on tens of billions of euros that have helped finance Spain's economic miracle. Spain is set to be the big loser in tough negotiations on the EU's 2007-2013 budget as the bloc's paymasters led by cash-strapped Germany seek to limit their contributions and divert scarce resources to poorer new members in eastern Europe.
Madrid has received a net 93 billion euros ($117.6 billion) in EU funds since joining the EU in 1986, a cash injection that Spanish officials say surpasses US aid to other European countries received under the Marshall Plan after World War Two.
The funds have helped transform a once backward country that had recently emerged from Francisco Franco's dictatorship into one of the euro zone's fastest growing economies equipped with world-class motorways and high-speed rail networks.
Zapatero, an idealistic Socialist leader, says Spain is willing to put its "shoulder to the wheel" to help the EU's new east European members. But he wants to make the cuts as gradual and painless as possible.
If he fails, Spain could suffer a financial jolt that could cost voter support and open him to attack from the opposition Popular Party, already limbering up to blast Zapatero as a naive negotiator outflanked by EU rivals.
In Spanish eyes, the battle is about who pays the bill for the EU's eastward expansion last year.
Jose Ignacio Torreblanca, a researcher at the Real Instituto Elcano, a Madrid thinktank, fears Spain and Germany are on a collision course in the budget talks which the EU aims to complete by mid-June.
"As things stand now, two trains, Spain and Germany, are slowly heading against each other. An alternative way out which would help avoid a very damaging head-on collision is urgently needed," he wrote in a recent paper.
European Commission proposals would see the net inflow of EU funds to Spain drop from 48.7 billion euros in the current seven-year budget period to 5 billion in 2007-2013 - equivalent to a loss of 0.83 percent of Spain's Gross Domestic Product each year, according to government estimates.
Spain would go from being the largest net recipient of EU funds to a net contributor by the end of the next budget period - even sooner if the EU's six biggest paymasters succeed in capping the EU budget at 1 percent of its income.