The European Union's top paymasters slapped down European Commission plans on Tuesday to boost the bloc's budget, setting the stage for a tough fight over future funding of the soon-to-expand union.
The six richest EU states - Germany, France, Britain, the Netherlands, Sweden and Austria - have demanded the budget be capped at present spending levels. Germany said the executive should rein in costs just as it has told governments to do.
The EU executive wants to raise the ceiling, saying the bloc will otherwise have to cut spending in vital areas after the European Union expands from 15 to 25 states in May.
"Such a proposal...can only lead to the impression that citizens should pay more, and that is exactly what we do not want," German Finance Minister Hans Eichel said at a news conference during a meeting of EU finance ministers.
"Europe and the European budget should meet the same strict requirements as national budgets," he added.
Irish Finance Minister Charlie McCreevy, who currently chairs finance ministers' meetings, said discussions on the Commission proposal would be held at an informal gathering of ministers in Ireland on April 2-3.
"We intend to set out the roadmap as to how the discussions will take place," he said, adding that he saw a deal only in 2005. He reminded reporters that the last budget deal, sealed in Berlin in 1999, came only after long and tough negotiations.
But Eichel's comments were backed up by Britain and Austria. The three nations said they opposed Commission proposals to fix a ceiling for spending of 1.24 percent of Gross National Income, compared with current spending of around 1.0 percent of GNI.
The EU executive says the bloc needs to keep the current overall ceiling in the period 2007-2013 to be able to fund the bloc when it expands to 25 members.
The fight over how to fund the enlarged EU comes on the backdrop of a fight between the Commission and France and Germany over respecting the bloc's budget deficit rules.
The Commission is to take finance ministers to the European Court of Justice over their decision not to impose fines on France and Germany, even though the two countries will not cut their 2004 deficits under the EU's cap of three percent of Gross Domestic Product, which they have missed for two years running.
The Commission's budget proposal is due formally to be made next month, although the key details have been leaked.
British Chancellor of the Exchequer Gordon Brown said it was vital to show restraint when it came to the bloc's common budget as EU governments were making tough budget choices at home.
Eichel said more countries than the six who had written the letter would eventually back the drive to rein in spending, mentioning Italy, Ireland and future member Slovenia. Austrian Finance Minister Karl-Heinz Grasser called the plans to increase spending "completely unacceptable", as they would lead to more than a doubling of Vienna's net contribution.
Under current plans, the EU expenditure in 2006, the final year of the current budget period, will already account for 1.12 percent of GNI, the Commission has said. Abiding by a one percent cap would therefore mean cutting spending.
The Commission argues this would force cuts in support for farmers and poor regions, and preclude vitally needed investment in scientific research and security and foreign policy.