EU budget talks will go down to the wire

TOUGH negotiations to hammer out the European Union’s budget for the next seven years will go down to the wire, the Irish Government predicted last night.

As the opening day of the summit of EU leaders continued in Brussels late last night, Foreign Affairs Minister Dermot Ahern said that reaching agreement on EU finances until 2013 would be very tough.

However, while accepting that failure would be very damaging to the credibility of the enlarged union, Mr Ahern - in common with many other of Europe’s political leaders - said a deal was possible, though it may involve negotiations the run very late tonight.

“We have been here for only a few hours but there’s a sense that we do need to get an agreement,” Mr Ahern said at a briefing of the Irish media last night.

“We are expecting a tough 24 hours,” he said. “It’s probably going to go right down to the wire.”

This is the second attempt by European leaders to agree on the seven-year budget, following the failed Summit in June that saw bitter divisions emerge between Britain and France over Common Agriculture Policy (CAP) reforms and the British rebate.

Britain, which holds the presidency, says it will reduce its €5 billion yearly rebate if the CAP is reformed.

France is adamant that the CAP regime was agreed in October 2002 and is not open to renegotiation until 2013. Its view is shared by the Irish government.

The latest British proposal provides for a review of CAP before 2013 to address what it says are bloated farm subsidies.

The other two stumbling are the British rebate and the size of the overall budget. Britain has proposed a ceiling of 1.03% of the 25 countries’ total income for the budget, a sum which critics say will not allow the 10 new member states to modernise at a sufficiently fast pace. Critics say that the rebate cannot continue at its present levels because others will have to bear the brunt of costs for an enlarged EU.

However, it is widely accepted that Britain will make further concessions on the rebate. However, its efforts to push through CAP reform will depend on the support of German chancellor Angela Merkel.

The Irish Government is keen that new EU States get the best possible deal to fund development, while maintaining Irish interests. They include funding for the International Fund for Ireland, and an increase on the €250m for rural development, offered by Britain as a “sweetener” in its proposals. While Ireland will benefit to some extent from the budget, the country will cease being a net beneficiary and become a net contributor between 2009-13.

Of the rebate Mr Ahern said. “The elephant in the corner is the British rebate. They have moved somewhat but not to the satisfaction of everybody.”