EU recrimination escalates over budget failure

BRUSSELS - Recrimination among European Union leaders over their failure to agree on a long-term budget for the bloc escalated on Wednesday with Prime Minister Tony Blair under fire just before he takes the EU chair.

Outgoing EU president Jean-Claude Juncker squarely blamed Blair for the failure of last week's acrimonious summit and urged supporters of European political union to resist what he called attempts to degrade it to a mere free trade zone.

"Our generation does not have the right to undo what previous generations built," Juncker told the European Parliament, earning a standing ovation.

"Future generations will need a political Europe because if it isn't politically united, it will drift away."

French President Jacques Chirac told his cabinet in Paris that "British intransigence" had sunk a compromise at the Brussels summit, plunging Europe into crisis.

Britain made clear it would use its presidency from July 1 to change Europe's agenda by pushing continental partners to emulate its economic reforms and move away from farm subsidies.

In a withering account of the final hours of the summit he chaired, Juncker accused Blair of distorting his compromise proposals, spurning a chance for a review of all EU spending, and using disingenuous arguments on the scale of farm subsidies.

He was repeatedly applauded by the EU legislature on the eve of Blair's appearance in the same chamber to set out the priorities of the incoming British presidency.

Foreign Secretary Jack Straw gave a foretaste of that speech by criticising the big continental economies for failing to implement vital structural reforms despite pledges made at a Lisbon summit in 2000 to make the EU the most prosperous and dynamic of all the economies in the world.

"With some singular exceptions, of which the United Kingdom is one, that is not being achieved," he told reporters.

"The prime minister will set out the problem, setting out the need for the European Union not just in its rhetoric but also in the practical decisions that it takes ... to have a forward-looking agenda," Straw said.

Europe's lack of economic success lay at the root of its current problems, including the rejection of the EU constitution by French and Dutch voters and the budget failure, he said.

European Commission President Jose Manuel Barroso warned that if there was no quick budget deal, the EU faced paralysis and the new east European members would be the first to suffer.

Barroso urged Britain and France to consider compromise both on farm subsidies and on the British rebate from EU coffers, but without linking the two explicitly.

But his suggestion that the gap could be bridged by agreeing to review all EU spending in 2008 risks being drowned out by the rising volume of invective across the Channel.

Straw said he believed Britain could heal the EU's rifts during its six months in the presidency, but diplomats said lectures about British economic success compared to other countries were unlikely to calm tempers.

A French diplomatic source told reporters in Paris: "It's very hard to run a successful presidency right after saying 'Go screw yourselves'."

Straw hammered home Britain's demand for a radical overhaul of the EU's Common Agricultural Policy in the 2007-2013 budget.

"The whole world these days is now moving away from agricultural subsidies, especially export subsidies, to a more open market, not least so that each part of the world trades to its competitive advantage," he said.

But Barroso said EU leaders had agreed unanimously in 2002 to peg agricultural spending at its current level until 2013 and insisted deals should be respected.

He also said the EU needed to conduct a serious debate over its future ties with Turkey taking account of the message sent by Europe's electorates, sowing fresh doubts over Ankara's prospects of joining the EU.

He said the European Union should discuss the signal French and Dutch voters sent about Turkey's accession. But he stressed it should still open membership talks with the Turks on October 3.

Turkish markets showed little immediate reaction to Barroso's comments, reflecting widespread expectations that negotiations will start on schedule but be long and tough.

Barroso's remarks were the latest in a string of comments by EU leaders casting doubt on Turkey's chances of joining the EU.

Chirac called last week for a debate on expansion, and former Commission President Romano Prodi, said on Wednesday Turkey had no chance of joining in the foreseeable future.

- REUTERS