CORRECTED-Let us keep our aid cash, EU's poorer nations tell bloc leaders

(Corrects date of story to Feb 1, not Jan 31)

By Catarina Demony

LISBON, Feb 1 (Reuters) - A day after the European Union waved goodbye to Britain, some of Europe's poorest nations urged the bloc's leaders not to implement a "sharp and disproportional" cut to their aid money in the next long-term budget.

The European Union provides aid known as cohesion funds to member states in the south and east to help them invest in development and catch up with richer peers to the north and west.

But various proposals by the so-called "frugal" countries, including paymaster Germany in September, seek to reduce the size of the cohesion funds and attach conditions which would predetermine areas where investments should go.

According to European Parliament website, the European Commission proposed an allocation of 41.3 billion euros ($45.82 billion) to cohesion funds for the 2021-2027 programming period, down from 63.4 billion euros set aside in 2014-2020.

The proposals to cut the funds made blood boil among the poorer EU nations, creating an impasse as the next long-term budget is being prepared.

Leaders of affected nations gathered for the Friends of Cohesion summit in the Portuguese city of Beja on Saturday and in a joint declaration said funding for 2021-2027 "should maintain the level" of the previous budget.

"At a time the union becomes more fragile (after Brexit), our message should be in favour of a cohesive Europe," Portugal's Prime Minister Antonio Costa told reporters after the declaration was signed by 15 countries, including once-bailed out Greece.

Britain accounted for around 15% of the EU's economy and was the bloc's biggest military spender.

In the declaration, the nations said "any cuts in investment capacity of cohesion regions would be unacceptable" and that, at this late stage of the long-term budget negotiations, "no technical elements with major negative impact should be introduced".

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Any changes would "unnecessarily" delay an agreement, they added.

Story continues

The summit took place days after President of the European Council Charles Michel called a special meeting with EU leaders on Feb. 20 to discuss the budget. Michel will meet several prime ministers over the next week.

"I am fully aware that these negotiations are among the most difficult ones we have to face," he wrote in a letter sent to leaders on Jan. 25.

The current EU budget amounts to 1% of the bloc's combined Gross National Income (GNI). The European Commission has proposed a seven-year budget of about 1.1 trillion euros that would be about 1.11% of the EU's combined GNI.

Scared of having to dig too deep to fill the budget gap caused by Brexit, Germany proposed a 1% cap.

On Saturday, Austria's chancellor Sebastian Kurz threatened to veto the next EU budget if the proposal for countries to increase their contribution to 1.11% of GNI is not amended.

In an interview with Austrian broadcaster ORF, Kurz said: "If this proposal is tabled in this way, there will be no approval from us here, and I don't think from the other EU net contributors either." ($1 = 0.9014 euros) (Additional reporting by Jan Lopatka in Prague, John Revill in Zurich and Francesco Guarascio in Brussels, Editing by Clelia Oziel)

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