10 June 2005

PARIS - French president Jacques Chirac and German chancellor Gerhard Schroeder challenged British prime minister Tony Blair on Friday in repeating their demand that Britain accept a cut in its EU rebate.

"There must be justice in the financing of the EU budget," Chirac told journalists in Paris following talks with Schroeder. Britain, he said, must accept a "substantial cut in its rebate", which totals about GBP 3 billion (EUR 4.5 billion) a year.

For his part, Schroeder said he and Chirac were prepared to compromise on the financing of the EU budget for the years 2007 to 2013, but that this must not be a "one-sided step".

"Everyone must be prepared to make a gesture," he said, adding that he agreed with Chirac in the points he made on the British rebate.

On Thursday, Blair had rebuffed Chirac's request that Britain make "a gesture of solidarity" and accept a cut in its annual budget rebate from the EU.

Blair replied late on Thursday that Britain had paid two-and-a-half times more into EU coffers than France over the past 10 years and would therefore not give up the rebate.

However, on Friday the British prime minister hinted that he might be prepared to negotiate on the rebate but only if it were part of what he called a "fundamental review" of how the Union is funded.

Such discussions, he maintained, would have to include a reform of the Common Agricultural Policy (CAP). Blair said farm subsidies accounted for 40 percent of the EU budget while covering only 5 percent of the population.

The proposal was immediately shot down by Chirac, who said he was "not disposed to compromise on this consensual agreement".

Schroeder and Chirac met in Paris to prepare common positions ahead of the EU summit to be held 16-17 June in Brussels. One of the most pressing items on the agenda of that meeting will be the EU budget for the coming years.

Schroeder said that agreement on financing the budget must be found during Luxembourg's presidency, which terminates at the end of the month.

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