European Union foreign ministers are meeting today in an attempt to resolve disagreements over the next EU budget.
Talks broke down last June when Britain blocked a compromise by refusing to accept any curb on its annual rebate from EU coffers unless it won a promise of future cuts in generous farm subsidies that benefit France most.
Sweden's Foreign Affairs Minister Laila Freivalds (L) talks to her Austrian counterpart Ursula Plassnik at the start of an EU foreign ministers' council in Brussels today
Any chance of agreement at the December 15th-16th summit hinges on British Prime Minister Tony Blair's willingness to give up part of the rebate, worth €5.1 billion last year, but some diplomats question whether he is domestically strong enough to do so.
France has shown no willingness to give an inch on farm payments, standing by a 2002 agreement that pegged agricultural spending at current levels until 2013.
In a tough speech to the European Parliament last week, British Foreign Secretary Jack Straw said it would be very hard to get a deal unless there were significant changes in the €871 billion package proposed by Luxembourg, which others see as the basis for a solution.
European Commission President Jose Manuel Barroso warned last week that another failure to agree on the budget would plunge the EU into "a real crisis".
The scenario gaining ground in Brussels is that there could be no long-term budget at all, sending the EU back to the pre-1992 system of annual budgets negotiated in last-minute battles with the European Parliament.
Without an agreement, the existing budget would be rolled over, adjusted for inflation. The British would keep their rebate, the French their farm subsidies.
The first victims would be the 10 new, mainly east European member states that joined the 25-nation bloc last year, since it would push new spending priorities to the bottom of the pile and make long-term financial programming impossible.