Blair and Chirac fail to resolve budget row

THE deadlock over Europe’s budget continues after a terse meeting in Paris yesterday between the French President Jacques Chirac and British Prime Minister Tony Blair.

The dispute is set to deadlock negotiations on the six-year funding plan at the leaders’ summit in Brussels tomorrow and Friday.

Mr Blair acknowledged they had not found any middle ground. “The meeting I have just had with President Chirac was immensely amicable. But obviously there is a sharp disagreement.” He added that it was difficult to see these differences being bridged.

Earlier he had rejected a compromise proposal from president of the EU’s rotating presidency, Luxembourg premier Jean Claude Juncker, that would have allow Britain retain its rebate, but freeze it at €4.6bn a year.

Britain is isolated in insisting it must retain its ever growing rebate, worth €4.5bn this year but estimated to grow to €4.8bn a year by 2013. It was won over 20 years ago by Margaret Thatcher to make up for the amount of EU money going to French farmers.

Now every country, including Ireland, is adamant the rebate is out of date.

Mr Blair points to the huge agriculture subsidies that account for about 45% of the EU budget and which hugely benefit French farmers. He has demanded that the Common Agriculture Policy agreement cooked up in Berlin three years ago by Mr Chirac and the German Chancellor Gerhard Schroeder be renegotiated.

The CAP budget makes no provision for Romania and Bulgaria, due to join the EU in 2007. The Commission estimates an extra €8bn will be needed for their farmers. But Britain, in particular, wants this money to come from the existing budget.