The European Uion summit. Cries and gestures

A fractious and lengthy meeting strikes a budget deal that answers almost no questions about the future

THE budget announced in Brussels on December 17th was a return to business as usual in the European Union. Depending on where you stand, the deal was either a triumph or yet another example of the Union burying its head in the sand. A sceptic might reasonably conclude that, in the EU, these are one and the same thing.

The deal sets total EU spending at euro862 billion ($1,036 billion) in 2007-13 (the EU draws up budgets in seven-year periods). This was rather over euro10 billion bigger than the British, as holders of the EU presidency, were proposing; but it was almost euro10 billion less than was suggested by the Luxembourg EU presidency in June. Hard on the heels of the European constitution's rejection by French and Dutch voters, that summit then collapsed acrimoniously over the budget.

Britain will also give up around one-fifth of its budget rebate that is attributable to the cost of EU enlargement to the east. The forgone amount is now euro10.5 billion over seven years--more than the euro8 billion first offered by the prime minister, Tony Blair, but less than the euro14 billion that the French government had demanded. Meanwhile, the French stuck firmly to the October 2002 EU summit deal to keep spending on the common agricultural policy (CAP) unchanged until 2013--but they accepted the proposal for a review of the entire budget in 2008.

In short, this budget was a characteristic exercise in national self-interest and splitting differences. For many years, the salient features of the EU have included an obsession with detail, a preference for incremental change, an inability to do things until the last minute, habit-forming dependency on France and Germany, and a commitment (sometimes wobbly) to enlargement. The summit displayed all of these.

The difference in spending between what Britain proposed and what France wanted was just over euro20 billion. For comparison, the combined total of all European governments' budgets is some euro4 trillion a year. The main reason for hailing the deal as "good for Europe"--as both Mr Blair and the European Commission president, Jose Manuel Barroso, tried--is that it is not worth arguing about such relatively small amounts. By getting the budget out of the way, European leaders can now start talking about important things, like structural reforms and jobs. Naturally, there is no guarantee that they will.

Even though this was the first chance to review EU spending since ten new members joined in 2004, the budget displays a strong preference for incremental change. There was almost no shifting around between categories (the CAP gets as much as before). Despite the promised review in 2008, the deal puts off any serious chance of further CAP reforms until 2013.

The EU is often unable to decide anything until it is almost too late, and this summit was no exception. Although budgets last for seven years, the British presidency made its first proposal only ten days before the meeting. One result was that last-minute haggling led to a deal only at the absurd hour of 2am. Negotiations may not even be over. The European Parliament has to approve, and each EU member is required to ratify the deal (in most cases by national parliaments) because it tinkers with the treaty-based system of financing.

A second result of Britain's approach was that the deal is yet another grubby compromise. Mr Blair originally wanted to offer big cuts in Britain's rebate only in exchange for big cuts in the CAP--logical enough, since the rebate arises mainly because Britain gets so few receipts under the CAP. But since France refused to contemplate more farm reform, and since Britain would not forgo even more of its rebate, the remaining burden of adjustment fell on the EU's newer, poorer members. Regional aid is cut by euro16 billion in all.

That it was not cut by more was largely thanks to Angela Merkel. At her first summit, Germany's new chancellor won widespread praise for retuning the Franco-German "motor of Europe". The Franco-German relationship was not exactly broken, but under Jacques Chirac and Gerhard Schroder it tended to operate largely by excluding others (this happened with the 2002 deal to preserve CAP spending, for example). Not this time.

During the summit, Ms Merkel joined forces with Mr Chirac to demand a bigger budget. Mr Chirac called this a "Franco-German proposal". In fact, it was largely Ms Merkel's, and even then she had to cajole Poland into accepting a budget smaller than it had wanted. In the end, rather like Helmut Kohl, her Christian Democrat predecessor as chancellor in the 1980s, she made a gesture to help seal the compromise, offering Poland euro100m extra from aid earmarked for eastern Germany. If her influence keeps growing, this summit may have marked the start of Germany's emergence as the central power in an EU of 25.

Or perhaps more. One unnoticed consequence of the summit was that EU enlargement should--or at least may--continue. Buried away in its conclusions was one giving Macedonia the formal status of a candidate for membership. That may not sound a big deal: Macedonia has only 2m people and no date has been set for accession talks, let alone accession. But the country is a test of whether the EU can keep the Balkans from exploding. In 2001, the majority Macedonians and minority Albanians almost went to war. Working towards EU membership keeps Macedonia together. All other Balkan countries were relieved that it is now on offer.

There might have been one exception to the rule that the summit was business as usual, for good and ill: the review clause. EU leaders have asked the European Commission to produce proposals for reform of everything, including the CAP and the British rebate. It is hard to know what will come of this. On the one hand, leaders have committed themselves to a process that may well produce some ideas for root-and-branch reform. On the other, any national government will be able to block any of these ideas. Indeed, the ambiguous wording of the terms for the review seems designed to ensure that nothing actually changes before 2013. On balance, then, the review seems likely to maintain business as usual at least until then.

After a year of shocks to the European Union, a return to normality might seem to be an achievement. Yet there is something slightly bizarre about it. After the rejection of the constitution, European leaders decreed a "period of reflection" to settle fundamental questions about the direction of their club. Six months later, with little discussed and nothing decided, they have fixed the EU's budget in stone for seven years, as if the constitution had never been heard of. But perhaps that, too, is just business as usual.

Article says that the unsatisfactory agreement on the EU's Financial Perspectives, 2007-2013 made at the EU Summit in Brussels, December 2005 answers almost no questions about the future of the European Union.

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