Merkel to play peacemaker at EU budget summit

15th December 2005, Comments 0 comments

15 December 2005, BRUSSELS - British Prime Minister Tony Blair warned Thursday it would be "very tough" to clinch a deal on a new European Union budget after most leaders of the bloc rejected his new multi-billion euro blueprint for the period through 2013.

15 December 2005

BRUSSELS - British Prime Minister Tony Blair warned Thursday it would be "very tough" to clinch a deal on a new European Union budget after most leaders of the bloc rejected his new multi-billion euro blueprint for the period through 2013.

"It hangs right in the balance," said Blair as he entered talks, adding: "Look, it's going to be very tough and very difficult."

Blair vowed that he and other E.U. leaders would still seek to clinch a budget deal at the two-day summit in Brussels of the 25- nation Union.

But hopes were fading after the revised budget proposal by Britain - which currently holds the rotating E.U. presidency - were sharply rejected in European capitals from Paris to Warsaw.

The expected summit clash is over demands led by France that London give up its annual 5 billion euro (6 billion dollars) rebate from the E.U. won by former British Prime Minister Margaret Thatcher in 1984.

Blair has so far dug in his heels and vows the rebate is only up for negotiation if France is willing to give up its annual 10 billion euro E.U. farm subsidies.

French President Jacques Chirac has fiercely rejected any reform of agriculture spending - which devours 40 per cent of the E.U.'s 110-billion-euro annual budget - before 2014 at the earliest.

Chirac arrived early at the E.U. headquarters in Brussels, apparently to hold private talks with Blair before the summit, but made no comments to reporters as he entered the building.

Unless the two leaders can cut a deal, the stage will be set for another bitter E.U. battle between bloc heavyweights France and Britain.

"(This) is no basis for an agreement acceptable to all," warned French Foreign Minister Philippe Douste-Blazy, echoing comments by other E.U. leaders.

Poland, the biggest new E.U. member state in Central Europe, vowed to veto Blair's revised budget plans.

Germany has also cautiously criticized the new blueprint but Chancellor Angela Merkel - attending her first regular E.U. summit - is seeking to play the role of peacemaker.

She has, however, firmly rejected raising the E.U. budget contribution from Germany. Berlin is the bloc's biggest paymaster, footing the bill for 20 per cent of all E.U. spending.

Despite the battle over the budget, E.U. leaders are under intense pressure to reach a compromise after their acrimonious failure to agree the budget last June and after French and Dutch voters rejected the bloc's constitution.

There is now fear among European leaders that ending the year in bitter division could plunge the E.U. into a lasting crisis.

"(Failure) would be a devastating signal for Europe," said German Foreign Minister Frank-Walter Steinmeier in a speech to parliament in Berlin before flying to Brussels.

Leaders of the 25 E.U. states are expected to express criticism of the budget plan over a working dinner on Thursday night. The British presidency is then expected to draw up a revamped proposal to be discussed Friday.

But given the gulf between Britain and most of its European partners, and the sour mood between Blair and key leaders like Chirac, chances for a deal appear to be slim.

Blair may be keen on brokering an accord but being seen to cave into demands by leaders such as Chirac would spark a political storm in Britain and could even force him from office.

London has offered just 2.5 billion euros more for the budget from 2007 to 2013, boosting the total to 849.3 billion euros, as the basis for the talks in Brussels.

Seeking to placate the new Central European members, Blair has offered Poland an extra 700 million euros with a range of sweeteners for other states including 34 million euros for Lithuania to help shut down its nuclear power stations.

London had originally wanted to cut Central European development funds by 10 per cent triggering anger in the new member states. That said, the initial plan would have given the region 150 billion euros for the seven-year period to revamp the economy, infrastructure and environment.

In a sign that budget negotiations could drag well into next year or beyond, Slovak Prime Minister Mikulas Dzurinda says the bloc has until its October 2006 summit to cut a deal at the latest.

A senior German official predicted that if the Brussels summit failed to reach agreement the negotiations could last for up to another 18 months.

Failure to secure a budget deal would force the Austrian government into the task of trying to hammer out a deal when it holds the E.U. presidency during the first half of next year. Finland takes over the presidency for the second half of 2006, followed by Germany in 2007.


Subject: German news

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