October 24, 2014 / 11:43 AM / in 3 years

'We won't pay,' furious Cameron tells EU over surprise bill

BRUSSELS (Reuters) - In a vivid display of fury at European Union technocrats, British Prime Minister David Cameron refused to pay a surprise 2.1-billion-euro bill on Friday as EU leaders ordered an urgent review of the calculations used.

Eurosceptics at home branded the EU a "thirsty vampire" for seeking an additional, immediate sum worth a seventh of London's annual payment following a major statistical review of national incomes. Cameron demanded action from fellow leaders at a summit, calling the sudden bill "completely unacceptable".

He found some sympathy. Cameron told reporters Italian Prime Minister Matteo Renzi lambasted "bureaucrats without a heart", who made it harder to fend off the attacks of Eurosceptics.

Chancellor Angela Merkel of Germany, which like France is to get a refund in the same exercise, offered understanding for the peremptory way such a hefty demand was made - though she said Cameron did not tell his fellow leaders he would not pay at all.

"He just had concerns about the short deadline," she said.

But in a show of anger in front of television cameras that some found at odds with a more collegial atmosphere in the summit room, Cameron said: "It's an appalling way to behave.

"I'm not paying that bill on Dec. 1. If people think I am, they've got another thing coming. It is not going to happen."

EU ministers will hold an emergency meeting on the issue next month. Cameron said he wanted to understand the technical calculations and was also ready to mount a legal challenge.

EU officials insisted the revision, which also saw Italy, the Netherlands and even crisis-hit Greece asked to pay much more for the share of EU costs, was part of an annual statistical exercise handled by civil servants, not politicians.

Calculations Questioned

Jose Manuel Barroso, outgoing president of the European Commission, defended his staff, telling a news conference the system was designed by national governments that provided the income data on which payments were calculated.

He said the EU executive would explain the calculation to ministers but there was no question of changing what countries had themselves determined were their gross national incomes.

Cameron noted that annual revisions to the payments had never been so great. EU officials called it an effect of a once-in-a-generation review of how national incomes are calculated, which found Britain was richer than it had previously declared.

Officials at EU statistics office Eurostat said that was a result mainly of taking more account of money flowing in 2002-09 to non-profit organizations ranging from churches and universities to trade unions, charities and sports clubs.

However, governments have little awareness of how other states may be amending their income calculations until the data is put together by Eurostat in the final weeks, leaving the size of any budget adjustment open to potential surprises.

The apparent lack of awareness of the political sensitivity of such big adjustments this year overshadowed a day of summitry intended to review efforts to revive economic growth. The leaders also came up with 1 billion euros ($1.3 billion) of cash commitments to fight the Ebola outbreak in West Africa.

After an EU deal to curb climate change overnight, the anger on Friday at Brussels' officials may dampen the final week of the present Commission led by Barroso. He will make way for incoming President Jean-Claude Juncker on Nov. 1 after 10 years in charge of the European Union's executive branch.

Britain's Prime Minister David Cameron gestures during a news conference after an EU summit in Brussels October 24, 2014.Christian Hartmann

"Political" Approach

Juncker has pledged a "very political" rather than technocratic approach to try to regain the trust of the half-billion people in the EU, many of whom are turning to anti-EU parties like the UK Independence Party.

But, Cameron warned, the latest row made it harder for him to make the case to British voters that they should stay in the 28-nation bloc.

Cameron has demanded reforms and plans a referendum on EU membership if he manages to secure re-election next May.

His Eurosceptic opponents, gaining ground fast on his Conservative Party, accused the premier of misleading voters.

"David Cameron once claimed that he had reduced the EU budget, but the UK contribution went up and now, quite incredibly, our contribution goes up a second time. It's just outrageous," said UKIP leader Nigel Farage.

Britain's Prime Minister David Cameron attends a news conference after an EU summit in Brussels October 24, 2014.Christian Hartmann

"The EU is like a thirsty vampire feasting on UK taxpayers' blood. We need to protect the innocent victims who are us."

Even Cameron's pro-European Liberal Democrat coalition partners, led by Deputy Prime Minister Nick Clegg, said it was unacceptable to change membership fees "at the drop of a hat".

Several fellow EU leaders urged Britain to respect long-standing EU rules and not blow an accounting exercise out of proportion. Finland's prime minister said Cameron should not make "mountains out of molehills".

Alexander Stubb said, however: "I think it's very important that we don't start treating the EU as some sort of a simplified accounting exercise." He noted that Britain gets a rebate on its EU bill every year, unlike Finland.

After that rebate, worth 5.9 billion euros this year, Britain was due to pay 14.7 billion euros into the EU's 140 billion-euro annual budget. Germany is by far the biggest net contributor, followed by France and Italy.

Rising Eurosceptics

Merkel offered more sympathy: "I too was astonished," she said. "No one cast doubt on the calculation, but it's not so simple to pay 2 billion euros within a few weeks."

The request for additional funding came at an awkward time for Cameron, with a general election due in May with UKIP cutting into his Conservatives' share of the vote.

The Eurosceptic party looks likely to win a second seat in parliament on Nov. 20, when a lawmaker who resigned from the Conservatives is standing for UKIP in a by-election in southern England. The budget row is a gift to UKIP for that ballot.

Anti-EU right-wingers in Cameron's own party also sought to exploit the issue ahead of a referendum on EU membership that he has promised for 2017 if the Conservatives win next year's national election.

John Redwood, a leading anti-EU Conservative lawmaker, said: "He should first of all decline to pay. He should make it very clear that the UK doesn’t accept retrospective taxation."

(1 US dollar = 0.7891 euro)

Additional reporting by Francesco Guarascio and Paul Taylor in Brussels and Andrew Osborn, Sarah Young and Michael Holden in London; Editing by Tom Heneghan

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