Blair and Chirac still divided by rebate chasm

PARIS - Britain and France were on collision course for the European Union summit starting tonight after Prime Minister Tony Blair admitted there were "real difficulties" over Britain's rebate following talks with President Jacques Chirac.

After the setback of the rejection by French and Dutch voters of the EU constitution, another crisis looms over funding and spending plans for 2007 to 2013.

Blair, speaking at the British Embassy yesterday, looked relaxed, but he laid out a daunting task for the summit: to put Europe on a course of economic reform or face months of the impasse over the budget.

Chirac, having gone out of his way to inflame the budget quarrel last week, appeared determined to seem conciliatory yesterday.

He greeted Blair at the Elysee Palace with a smile and vigorous handshake.

After their talks he issued a statement through his spokesman, Jerome Bonnafont, who said the meeting had been "amiable and constructive".

Blair indicated that he was prepared to allow the British presidency of the EU from July to be dominated by the fresh crisis over the budget rather than to give ground at the two-day meeting in Brussels.

 

One thing was increasingly clear, said Blair: after the French and Dutch "no" vote, the EU required a clear political direction on many issues, including finance, economic reform and immigration.

In a new approach, Blair said he believed there had been a change of mood in Berlin, Luxembourg and France, which he had visited in the past 48 hours, in favour of halting further ratification of the constitution to allow "a pause for reflection for a period of months" .

The Prime Minister left little room for manoeuvre on the British rebate, insisting he would only agree to review it if the French and Germans were prepared to cut subsidies to agriculture, a suggestion that Chirac and the German Chancellor have rejected this week.

"I don't think it will send us into crisis provided we get the right answer eventually and do so within the political context people understand," said Blair.

"The financing doesn't come into effect until 2007 ... "

The Prime Minister's aides said the accumulated cost of freezing the British rebate between 2007 and 2013 would be 25-30 billion ($42-51 billion) euros. That would mean Britain would be paying up to a third of its gross national income more than France.

It remains politically unthinkable for Chirac to allow a reopening of the debate on agricultural reform in a budget settlement in Brussels.

However, France might accept a formula that meant its own net contribution to the EU budget increased in the years ahead.

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