Spain's Rajoy says EU budget proposal unacceptable

CADIZ, Spain Sun Nov 18, 2012 10:15am IST

Spain's Prime Minister Mariano Rajoy gestures during a news conference at the Ibero-American Summit in Cadiz, southern Spain November 17, 2012. REUTERS/Jon Nazca

Spain's Prime Minister Mariano Rajoy gestures during a news conference at the Ibero-American Summit in Cadiz, southern Spain November 17, 2012.

Credit: Reuters/Jon Nazca

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CADIZ, Spain (Reuters) - Spanish Prime Minister Mariano Rajoy said on Saturday that a draft European budget was unacceptable. The proposed seven-year budget would turn Spain into a net contributor to the EU for the first time by cutting aid and subsidies.

European Union chief Herman Van Rompuy proposed a compromise draft EU budget on Wednesday, aiming to go part way to meeting spending cut demands from Britain, Germany, Sweden and the Netherlands.

Van Rompuy's draft would cut 80 billion euros out of the roughly 1 trillion euro budget for 2014-2020 proposed by European Commission President Jose Manuel Durao Barroso.

France on Thursday rejected the proposal saying the limits it proposes on farm subsidies were unacceptable.

"The first draft presented by Mr. Barroso seemed to us a good document to start talks. The one that Mr. Van Rompuy presented later is unacceptable," Rajoy said in the southern Spanish city of Cadiz, where he was at a summit of Latin American and Iberian leaders.

Spain fears losing some 20 billion euros of fishery, agricultural and development funds in the 2014-2020 budget, if it is cut as much as Van Rompuy proposes, El Pais newspaper reported on Saturday.

Britain has threatened to veto the budget because cuts do not go far enough and EU officials are looking at ways to manoeuvre around a potential veto.

"There's a contradiction when some countries that say they want to make growth a priority will not support the main instrument that we have at the European level, to invest in growth," Barroso said in Cadiz at the summit on Saturday, refering to the British threat to veto the budget.

(Reporting by Tomas Cobos; Writing by Fiona Ortiz; Editing by Rosalind Russell)

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