EU: British prime minister Tony Blair failed to persuade central and eastern European leaders to accept a cut in EU funding yesterday, but tough talks produced whispers of a compromise deal on the bloc's long-term budget.
Mr Blair wants to reduce total EU spending for 2007-13 and, in the face of fierce Irish and French resistance to cuts in farming subsidies, he is trying to persuade the EU's 10 newest and poorest nations to accept less cash for development projects.
Mr Blair rejected any reduction in the rebate Britain receives under the Common Agricultural Policy, but suggested that changes to other parts of the rebate may allow Britain to "pay its fair share" in helping new EU states catch up with richer members.
"I'm not giving up the rebate, but we've got to pay our fair share of the costs of enlargement," he said. "We are prepared to pay our fair share of the economic development money that these new Europeans need."
After meeting the leaders of Hungary, Poland, Slovakia and the Czech Republic, Mr Blair warned that the EU's new members could pay a high price if the bloc failed to clinch a budget deal at a summit this month, the last under Britain's presidency.
"If we fail to get the budget deal in December, it is not more likely we will get a budget deal in six months or a year," he said after talks in Budapest. "The consequences of that, is that you can end up in two years time with only a third of the money you need."
Hungarian prime minister Ferenc Gyurcsany said a deal was not imminent. "Today we are far from agreement. We want to come to an agreement but not at any price."
Polish prime minister Kazimierz Marcinkiewicz, whose country stood to lose some €6 billion under initial British proposals, said Warsaw would not accept "a bad budget" at the December 15-16th summit, but he sounded cautiously optimistic.
"We needed this conversation [ with Blair] - it was very tough but very important," he said. "In my view we are nearing a proposal which is not yet ideal, but much better than the informal proposal."
Diplomats said the new EU members might accept some cuts to so called cohesion funds if they were made easier to access, and fewer restrictions were placed on how they were spent; reductions in rural spending could also be applied to richer states to spread the burden.
Britain may also agree not to claim any rebate money back from its contributions to cohesion funds, leaving more in the EU pot, sources close to the talks said. Mr Blair said he would release firm budget proposals early next week, adding: "This is going to be an interesting couple of weeks ahead of us."