Britain Tells EU to Expect No Surprises As Budget Crisis Looms

For those who brought even a modicum of hope with them to the meeting in Brussels, the possibility of current European Union president Britain presenting new proposals to ease the impasse died quickly as British Foreign Secretary Jack Straw announced as way of introduction the fact that there would be nothing to discuss.

Diplomats at the meeting said the foreign ministers spent less than a minute on the 2007-2013 budget since there were no new British proposals on offer. "It lasted 45 seconds," one said. Straw merely said London would put forward revised proposals during the week but added that London would not pay any price for an agreement.

"We're not in for a deal at any price," Straw told reporters, referring to the pressure Britain has been under to relinquish more of its annual rebate to fund aid to new east European members in the budget.

Straw’s stance makes it look increasingly unlikely that that there would be any concessions on the long-term EU budget when the ministers of the 25-nation bloc convene on Wednesday. When pressed on whether there was a chance of an accord being agreed upon on Thursday and Friday, Straw told reporters: "I can't say."

It was a further slap in the face for EU officials who are keen to avoid a damaging split over the budget akin to the crisis resulting from the bloc’s failure to ratify its own constitution.

Barroso appeals to Blair but to little avail

In an attempt to prevent another schism in the EU, European Commission President Jose Manuel Barroso had personally appealed to British Prime Minister Tony Blair for a rapid resolution, urging him to find a workable alternative to the existing proposals.

Barroso, pressing the point that Britain bore a special responsibility to ensure that talks did not collapse as they did at the acrimonious constitution summit last June, also asked Blair to raise overall EU spending and offer deeper and permanent cuts to Britain’s controversial rebate.

On evidence, Barroso’s words have fallen on deaf ears and have instilled a sense of dread in the EU president ahead of the summit this week. "As somebody put it, to fail once is unfortunate. To fail twice would be careless," Barroso told reporters.

The package Britain put forward last week proposed a cut of 14 billion euros ($16.49 billion) or 8.5 percent in aid to poor ex-communist newcomers to the bloc and detailed a continued rise of Britain’s own rebate over the next seven years. It was almost unanimously rejected.

Newest EU members facing huge bill if talks fail

Barroso highlighted the need to support the newest EU members when he spoke on Monday. "New member states must be offered a fairer deal. I believe they need to be offered significantly higher levels of investment than in the current proposal." Failure to reach a deal will immediately cost the new states cash in 2007. Despite the ominous signs, Barroso added that the "urgent, necessary" budget deal was "within reach."

Not according to Jack Straw it isn’t. The foreign secretary maintained that those members expecting big changes to the proposals would be disappointed, hinting at a set of plans not too different that were thrown out last week.

"We are thinking about revisions to those proposals, and those revisions, if indeed there are any, will be made available in the course of this week. These are difficult negotiations. The margin for maneuver is narrow," he said.

Britain thought it had the deal in the bag when it offered to forego 8 billion euros over seven years from its rebate, worth 5.6 billion euros this year, to meet what it called its fair share of the costs of the EU's eastward enlargement last year.

Britain's full share of the non-agricultural costs of enlargement would in fact be 18 billion euros, according to European Union financial experts. France put the figure at 14 billion.

France wants rebate cut in return for cooperation

The French weighed in with particular relish in the row over the British rebate, saying that it should be cut to 35-36 billion euros over the period instead of the 50 billion it would reach without reform. French Foreign Minister Philippe Douste-Blazy insisted that the reduction should be a "permanent legal commitment."

As an incentive, Douste-Blazy said that Paris would allow a future review of the entire budget as long as the 2007-13 package, which has provisions included for the protection of French agriculture, remained guaranteed.

Officials close to the British contingent said that there was a fair chance that the new proposals, due on Wednesday, would include a slight increase in the amount but by nothing like the amounts suggested by Brussels or Paris. All signs point to a round of last-minute bargaining at the summit and the real possibility of failure once again.