It is no overstatement to say that this week will be a defining period in the premiership of Tony Blair; it will also be vitally important for farm subsidies and world trade.
The United Kingdom holds the presidency of the European Union which meets in Brussels on Thursday in an effort to resolve the differences over its budget.
The UK also holds the presidency of the G8 group of wealthy industrialised nations which wants an agreement to free up world trade at the talks starting today in Hong Kong. Mr Blair's skills of diplomacy will be tested as never before and, at this stage of his career, his legacy is truly on the line.
It was Mr Blair who blocked an agreement on an EU budget last June, saying that radical reform was required. Six months later, he is no nearer achieving it. This is partly because he took too long to get working on it in earnest but also because the UK is not and cannot be, an independent arbiter. Mr Blair seeks reform while protecting as much as he can of the UK's €5 billion a year rebate whereas member-states with major agricultural sectors, led strongly by France, insist that there will be no reductions in farm supports for another seven years - as was agreed in 2002.
Mr Blair is now proposing a much reduced EU budget. This has gone down badly with the new east European member-states who will have a lot less to spend than they were promised. It will also be so reduced that the 2007 membership of Bulgaria and Romania may be put on hold. Not surprisingly, Mr Blair is having a difficult time explaining to the (much poorer) new member-states why they should get less so that the UK will not suffer. The new member-states are also entitled to wonder why it is they who should pay for the problems created by the old member-states.
The proposal from Mr Blair does concede a reduction of some €8 billion in the rebate over the next seven years, provided that the EU budget is reduced and there is agreement to review all spending, including on the Cap, in 2008. But the European Commission says that this will still leave the UK as the smallest net contributor of the wealthy member-states, despite being one of the richest. Mr Blair will have to compromise further.
Indeed, if there is to be any agreement, there will have compromise on all sides. The UK's rebate must come down further and the new members will have to settle for a little less. An acknowledgment that farm spending will be reviewed in 2009 or 2010 may have to be conceded. This will not be popular but if farm subsidies are completely ignored in Brussels then the trade talks, where they will be centre-stage, may get absolutely nowhere.