Reform package is major boost for Schroder

As other EU leaders headed homewards to sleep yesterday morning after their marathon negotiations in Berlin, the German Chancellor…

As other EU leaders headed homewards to sleep yesterday morning after their marathon negotiations in Berlin, the German Chancellor, Mr Gerhard Schroder, went directly to the Bundestag to brief the house about the Agenda 2000 deal. Mr Schroder acknowledged that the agreement was not ideal from a German point of view but he hailed it as a good compromise.

"It wasn't easy because we had to come up with a sensible mixture between budgetary discipline, social justice and solidarity of the strong with the weak. But we also had to ensure that the strong who pay less should show some solidarity with the strong who pay more," he said.

The Chancellor was clearly relieved to have secured a deal at all after a 20-hour negotiating session that was at times so stormy that the talks came close to collapse on several occasions during the night.

"It was very tense at the end, too. It was touch and go," according to the Foreign Minister, Mr Joschka Fischer.

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Mr Fischer admitted to the Bundestag that Germany had not achieved all it was hoping for in terms of a reduction in its net contribution to the EU budget.

But he insisted that the deal represented a good decision for Europe and pointed out that some initiatives could not be agreed because they were simply unacceptable to one member-state or another.

"And what was unacceptable to Germany?" asked the Bavarian prime minister, Mr Edmund Stoiber.

Mr Stoiber condemned the Berlin agreement as falling far short of the Chancellor's promise to introduce a fairer budgetary system for the EU that would substantially reduce Bonn's contribution.

Mr Schroder was unable to specify how much Germany would save under Agenda 2000, but he admitted that it would be a modest sum.

"From what we can tell, it will not be a lottery win," he said.

Even if Mr Schroder cannot claim a major victory on the budget, the agreement on a reform package is a major boost to the Chancellor's political position.

Two weeks after Mr Oskar Lafontaine's resignation as finance minister, a week after the European Commission stepped down and only a day after German forces began their first offensive operation since the second World War, Mr Schroder has shown that he can provide leadership in the midst of crisis.

German officials hope that the leaders' swift decision to nominate the former Italian prime minister, Mr Romano Prodi, as the next president of the European Commission will send a signal to the financial markets that Europe remains capable of decisive action.

The Chancellor feared that failure to reach agreement in Berlin could undermine the euro, making it more difficult for the European Central Bank to initiate the cut in interest rates which Germany's struggling economy needs.

Mr Schroder faces a special conference of his Social Democrats next month which will anoint him as party chairman, reinforcing his authority within his centre-left coalition. Yesterday's success in Berlin will further enhance the Chancellor's reputation.

As he emerged bleary-eyed from the summit yesterday morning, Mr Schroder smiled broadly at reporters and declared that the Agenda 2000 deal was worth a sleepless night.

"I don't think we came to Berlin in vain. We've demonstrated Europe's ability to act. We've had to work hard but it was worth it," he said.