- The Washington Times - Friday, June 17, 2005

BRUSSELS — The European Union yesterday failed to reach an agreement on its long-term budget as a two-day summit turned into a rare hostile gathering of leaders of the 25 member-states.

They agreed, however, to honor their commitment to accept Bulgaria and Romania, which signed accession treaties in April, in 2007 or 2008.

There had been concerns that further expansion might be put on hold as a result of the rejection of the proposed EU constitution by France and the Netherlands three weeks ago.

Leaders put off a decision on the 25-nation bloc’s 2007-13 budget — about $147 billion a year — after a rift between Britain and France proved too wide to bridge.

To move the budget along, the EU’s new members offered to return some of the budget aid they are to receive from Brussels if a deal could be reached, but the gesture did not help.

“We don’t want poorer East European countries to start paying money to us,” British Prime Minister Tony Blair said at a press conference early today. “We want fair distribution and proper prioritization.”

He said the current spending priorities of the EU are “distorted,” and “not sensible,” arguing that the large agriculture subsidies take away funds for education and science, among other fields.

France, with a larger agricultural base than other EU members, is allowed to offer subsidies to the agricultural industry in order to level the playing field.

Mr. Blair accused French President Jacques Chirac, as well the Luxembourg presidency, of using unfair tactics to make Britain appear isolated at the summit, but he said those tactics failed.

“We weren’t alone around the table,” he said. “There were five countries who didn’t reach agreement.”

Former British Prime Minister Margaret Thatcher won a rebate in 1984 as compensation for the limited amount of EU farm subsidies Britain receives compared with France and other nations.

“We are still willing to discuss the rebate, but it must be within the context of a reform of the budget’s structure, and that seems to be a problem,” an aide to Mr. Blair said.

Mr. Blair wanted to discuss reduction of the French farm subsidies, only to be forcefully rebuffed by Mr. Chirac.

Mr. Chirac, a leading proponent of scrapping Britain’s rebate, insisted that it “should in no case be conditioned on the revision of farm spending,” according to notes his aides leaked to reporters as he was speaking in the summit hall.

He said he was willing to accept up to $12 billion in cuts, but nothing more.

“I’m ready to make this effort if, and only if, we stop there,” Mr. Chirac said.

A last-ditch effort by Luxembourg Prime Minister Jean-Claude Juncker, who chaired the summit because his country holds the EU’s rotating presidency for the first half of the year, proved futile.

Mr. Juncker met separately with Mr. Blair, Mr. Chirac and other leaders, hoping to at least find out how much they were willing to give up.

He suggested that the British rebate be frozen for seven years and then gradually phased out. Both Mr. Blair and Mr. Chirac rejected the idea. Earlier, Mr. Juncker had proposed reducing the refund from about $6.2 billion to the pre-enlargement level of about $5.6 billion.

European Commission President Jose Manuel Barroso said this week that the 10 new EU members that joined last year are “some of the poorest” in Europe and should not be expected to carry the burden of Britain’s rebate.

On Thursday, leaders decided to postpone the ratification of the EU’s troubled constitution beyond the previously set November 2006 deadline, but they failed to agree on whether to freeze the process for now.

Yesterday, they also signaled that accession negotiations with Turkey, set to begin in October, will go ahead, but the talks are expected to last for decades.

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