European Union leaders have clinched a deal to pour five billion Euro into community projects to stimulate the lagging economy, but couldn’t agree on what it should be spent on, only that it would be used by the end of 2010 as Germany insisted. “Some of the details still have to be ironed out, but the five billion Euro package has been agreed in principle,” a diplomat familiar with the talks told Deutsche Presse-Agentur (dpa.) The agreement came after four months of haggling between EU countries and ended the drama of whether European Commission President Jose Manuel Barroso, who made the proposal in November, would get a deal.

The Czech presidency of the bloc successfully mediated talks during a summit of EU heads of state and government in Brussels and a last-minute compromise text tabled by the Czech government stated that “due to the urgent need for the stimulus, all legal commitments implementing the budgetary commitments ... should be made before the end of 2010,” although some political observers doubted the timetable could be met. News of a deal came after its biggest critic, German Chancellor Angela Merkel, said at the start of talks in Brussels that “any additional measures should only be taken if a substantial part of these measures can be implemented very quickly.” Otherwise, she said, “They would not help tackle the crisis.”

The European Commission proposed allocating the five billion Euro in what it called “unused” community funds to finance a series of projects promoting high-speed Internet, carbon capture and storage facilities, offshore wind farms and energy interconnections. While the money is only a small part of the EU’s 400 billion Euro economic recovery package, it immediately sparked squabbles, with the biggest contributor to the EU budget - Germany - initially arguing that any “unused” money should be returned to member states, and others objecting to where and how the money was being spent. The compromise text includes 200 million Euro for the controversial Nabucco pipeline project, which is intended to carry gas from Central Asia to Austria via Bulgaria, Romania and Hungary, bypassing Russia although the 7.9 billion Euro pipeline has suffered a series of delays and is not expected to be completed before 2013, at the earliest. Romania and Poland wanted money to be devoted to Nabucco.

The Czech compromise text earmarks a total of 2.3 billion Euro for gas and electricity infrastructure projects. Some 505 million Euro is to be spent on offshore wind energy projects, 1.2 billion for carbon capture and storage programmes, and a further one billion for the spread of broadband Internet in rural areas. The text makes it clear that no money will be taken from the EU’s 2008 budget, thus meeting a request by Germany. It also allocates fresh money to Portugal, Austria and Spain.

The proposal had quickly became mired in controversy as member states disagreed over the question of where the money should come from, and exactly which projects in which countries should be financed. Graham Watson, a Member of the European Parliament from the United Kingdom, and leader of the Alliance of Liberals and Democrats for Europe (ALDE) in the body, said failure to reach a deal would have been costly. “Member States have been dragging their feet since last November when the European Commission proposed pumping these funds into the real economy. Most measures endorsed until now were targeted at the financial sector. We need more job-creating investments in the real economy and we need them now,” he said.