\'Fright Night\' for Cameron in European Budget Wrangle

LONDON - It was a terrible night for David Cameron, the British prime minister, but a great night for headline writers.

“PM's Europe Fright Night,” “Halloween Horrors” and “Nightmare on Downing Street” was how the press described a humiliating parliamentary defeat for Mr. Cameron at the hands of rebels in his own Conservative Party.

The motive for the blood-curdling revolt was the rebels' demand for a cut in the budget to fund the European Union over the next seven years, which officials in Brussels want to raise to "1 trillion-plus. Mr. Cameron had argued for a freeze.

It is a visceral topic for right-wing Eurosceptics in Mr. Cameron's party. However, current negotiations over how much the 27 members of the Union spend on financing their joint supranational institutions have sparked dissent beyond Britain.

My colleague James Kanter reported from Brussels this week that the budget battle is expected to be particularly hard this year amid the climate of austerity brought on by the financial crisis.

James reported that Sweden, another hardliner in the budget debate, was seeking "150 billion, or $194 billion in cuts.

Along with Britain and Sweden, the Netherlands and Finland complete a quartet of budgetary hardliners that one senior European official has reportedly nicknamed “the Taliban.”

They are outraged that the European Commission, the E.U.'s executive arm, is demanding an increase in the budget for 2014-2020 at a time when taxpayers across the Continent are being forced to swallow domestic spending cuts.

So what does the budget actually pay for? Among other things, it finances the Union's multinational institutions, research projects and cross-border infrastructure programs such as road-building.

Supporters of a robust central budget, which has grown rapidly since the European Union was given access to its own resources in the 1970s, say it allows the E.U. to pursue its own policy agenda, independently of individual member-states.

Even at "1.03 trillion, the European budget would represent only around one percent of the Union's members' gross income.

Opponents of budgetary growth argue, however, that it represents an unfair transfer of money from taxpayers in richer member states.

The most contentious issue is the cost of agricultural subsidies that account for more than a third of the sum being demanded by the European Commission.

In the Eurosceptics' worldview, inefficient French farmers enjoying a subsidized rural idyll and bloated, unelected bureaucrats in Brussels constitute a twin drain on limited resources.

The French, as the biggest beneficiaries of farm subsidies, are in no mood to see that part of the European budget trimmed.

“France could not support a multi-year budget that did not maintain the credits that come from the Common Agricultural Policy,” Bernard Cazeneuve, France's European aff airs minister, warned on Wednesday.

He said there were other possible sources of savings, including a much-resented annual rebate that Britain secured on its E.U. budget payments in 1985.

With even the French arguing in favor of trimming the Commission's overall budget proposal, that might mean cutting the funds allocated to helping incoming Eastern European states catch up with the rest of the Continent.

Mr. Cameron's rebels, who voted with the opposition Labour Party to deliver him a 307-294 defeat on Wednesday night, claim they have strengthened his hand in an eventual budget showdown with his European partners.

The British leader, no slouch when it comes to berating his fellow Europeans, had promised he would wield his veto to prevent any deal that was not Britain's interest.

As James forecast on Tuesday, the hostilities are likely to be protracted.