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Europe's leaders scrambled Monday to rescue summit talks on the EU's trillion-euro budget, with Italy and Germany on a collision course over cuts demanded by Britain, and France warning of a breakdown in negotiations.
"The negotiations are very difficult ... the conditions are, at this moment, not yet in place," French President Francois Hollande warned Sunday as European Union leaders prepare to meet in Brussels on Thursday and Friday.
Hollande spoke after tricky talks with electioneering Italian Prime Minister Mario Monti in Paris, a day after German Chancellor Angela Merkel said a bid to broker a deal on the 27-state EU's spending plans for 2014-20 would be "very difficult".
"These are all very multi-layered and complex topics," said Monti.
A special summit on the issue collapsed in November with leaders unable to resolve differences on a proposal by EU President Herman Van Rompuy for a reduced budget of 973 billion euros ($1.33 billion), just over one percent of EU gross domestic product.
The main thrust of the arguments concerns how spending cuts should be split across different European policies such as farming support or grants to poorer regions, with net beneficiaries of bloc spending -- more than a dozen countries including powerful voices like Poland -- themselves split on priorities.
Merkel and Hollande meet on Wednesday, after Merkel hosted Monti on Friday. The German Chancellor also meets later on Monday the Spanish Prime Minister Mariano Rajoy, whose government is currently embroiled in a corruption scandal.
For Hollande, the problem is how to square a conception of EU solidarity and a need to foster growth through big-ticket, cross-border investment in the likes of energy, transport and digital infrastructure networks, with national political priorities.
Van Rompuy, European Commission head Jose Manuel Barroso, European Parliament head Martin Schulz and Enda Kenny, the Irish Taoiseach currently in the EU's rotating presidency chair, also meet Monday to try and find a way through the morass -- but the facts are that the Parliament can block any deal it considers unsatisfactory.
And it may very well do so.
Leaders need to be unanimous on any compromise, but Schulz has warned of a likely "no" vote if the leaders agree a budget far below the initial ambitious proposals submitted by the Commission.
"If there is no deal, we can live with an annual budget," said Schulz.
Under this fallback system, which critics say undermines long-term projects and planning, the annual EU budget is automatically renewed at the previous year's level plus inflation.
Malcontents all round appear ready to use that as a way to maintain their negotiating stances.
Ministers for European affairs were meeting in Brussels on Monday, again trying to bridge the impasse.
But the positioning continues with Barroso -- at a time of industrial action signalled by unions representing tens of thousands of EU civil servants facing job losses -- due to outline his views in the Parliament in Strasbourg on Wednesday.
Sources at both the Commission and the Parliament say EU leaders will be looking to trim a further 20 to 25 billion euros at the February 7-8 summit.
"All the projects for the future that could bring growth and jobs are under threat," a source familiar with the budget negotiations told AFP. "The crisis is killing all our ambitions."
British Prime Minister David Cameron is seeking to bring the budget down to 886 billion euros, with the EU's administration commissioner Maros Sefcovic "very worried about how discussions are going," said a source.