Disappointing presidency

World View Paul Gillespie There was a lovely line in Jamie Smyth's report from the Brussels European Council yesterday

World View Paul GillespieThere was a lovely line in Jamie Smyth's report from the Brussels European Council yesterday. He quoted a French diplomat's advice for Tony Blair as he sought a budget compromise to rescue both the summit and the UK's EU presidency from failure: "Britain should put an end to its budget rebate in full and show solidarity with the rest of Europe."

Some chance of that happening - about as much as France or Ireland agreeing to abandon their insistence that the Common Agricultural Policy must stay in place, as agreed in 2002, until 2013.

The haggling yesterday was about whether Blair would agree further cuts in the British rebate to pay for increased aid to eastern Europe, in return for meaningful wording on a full review of the budget and the Cap in two years' time. Such bargaining among political leaders plays a critical role in the EU's evolution.

Blair's misfortune is that he has had to preside over a presidency and a summit in which the British national interest is so nakedly on view.

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This was provoked by Jacques Chirac last June, when, fresh from humiliating defeat in the French referendum and to divert attention from it by a nationalist gesture, he directly linked resolution of the EU budget row with an end to the British rebate. Blair had little option but to respond in kind, demanding an overhaul of the Cap in return, since the rebate was designed in 1984 to compensate Britain for its comparatively small agricultural sector.

Britain saw the agricultural imbalance coming when it negotiated EU entry along with Ireland and Denmark in 1969-72.

Economic and trade buoyancy arising from easier access to European markets was expected to pay for the Cap obligations agreed in the mid- 1960s before Britain joined. That was not to be; but it should not be overlooked that British (and Northern Irish) farmers benefit handsomely from Cap, because they operate on a large scale.

The trouble with big state EU presidencies is that they frequently allow national interests to interfere with disinterested brokering of compromise - or so it seems to smaller states, which have a much better reputation in these respects. Small states are less powerful, of course, which means they have fewer core interests across the span of the EU's growing agenda. They know we are all minorities in an EU of 450 million people, where solidarity is a necessary ingredient of political trust, the glue holding it together.

The second British budget proposal, representing a mere 1.03 per cent of overall EU output, is too small to ensure such solidarity will be available for the enlarging EU.

The British proposals are some 17 per cent less than those originally proposed by the European Commission to cover the 2007-13 period and also reduce those made by the Luxembourg EU presidency last June.

British representatives remind journalists that they increase spending compared to the previous budgetary period, that Britain's own contribution will increase if they are accepted and any mid-term review must be agreed unanimously.

But to protect the (increasing) British rebate and satisfy demands from other net contributors to the EU budget, such as Germany, Sweden and the Netherlands, the cuts proposed by Blair hit the new central and eastern European disproportionately, reducing structural and cohesion funding to them by some 8.5 per cent.

As the Polish ambassador to Ireland pointed out in a letter to this newspaper yesterday, these states negotiated entry on the understanding that such funding would be available in return for giving profitable access to their markets for rich EU-15 companies.

At this writing it is too soon to say whether the summit has agreed a budget to put a positive gloss on what is seen in most member states as one of the least impressive EU presidencies of recent years. As always, timing matters in relation to international affairs - and so does domestic politics.

Blair had the fallout from the French and Dutch rejections of the constitutional treaty to contend with, including Chirac's consequent weakening. Germany was in the middle of an election. And the promises he made in a brilliant speech to the European Parliament last summer about economic reform were not reflected in progress made at the Hampton Court summit or in the Lisbon process he has championed.

The gathering cloud over Blair's future as prime minister also hung over this presidency.

A major constraint on him has been Gordon Brown's refusal to concede a cut in the British rebate. In a speech this week Brown said: "European economic integration has been superseded by the reality of global integration," confirming the view that he sees transatlantic relations, globalisation and emerging China and India as the key issues facing Britain.

This cuts right across Blair's long-standing ambition to bring Britain to the heart of Europe, but the Iraq war and his failure to have a realistic debate on Europe in Britain have undermined it. On the constitutional treaty it has been all pause and no reflection, Quentin Peel noted. It will be up to the subsequent Austrian, Finnish and German presidencies to reopen it.

There are nevertheless several positives to report.

Britain oversaw the opening of membership negotiations with Turkey, a long-standing objective of its foreign policy (which is not so popular in France and Germany). An important EU initiative on relations with Africa has been agreed at this summit, fulfilling Blair's development goals as president of the G8. This weekend WTO negotiations hang in the balance, with the same agricultural ball in the air.