WASHINGTON, Dec. 17 (UPI) -- The European Union summit ended in the early hours of Saturday morning with a compromise deal on its $1,034 billion budget that left every European leader claiming to have won, even if the British tabloid press savage Tony Blair for giving away $12 billions.
Polish Prime Minister Kazimierz Marcinkiewicz punched the air like a football fan and shouted "Yes, Yes, Yes" in approval of the deal that brought his country an extra $5 billion in EU funds over the next seven years.
"Once again the crisis has been averted. Europe is now marching forward again," said French President Jacques Chirac. "Tony Blair has made a legitimate but politically difficult gesture."
To reach the deal, Chirac had to agree to a review of EU spending in 3 years time that will put on the table the EU spending on farm subsidies, whose big benefits to French farmers have been jealously protected by Chirac. And France, long a net recipient of EU, will finally become a net payer on roughly the same scale as Britain.
It makes little sense to define the deal in this way, reckoning the national winners and losers with a few millions here and a few billions there, but that is the way the EU's 25 leaders themselves keep score. They went hours into the night bickering over peanuts - arguing about $2 billions a year for the next 6-year budget period, when their combined economic output in that period will approach $100 trillion.
The real winner is the European project itself, and its commitment to share the expanding wealth delivered by its vast internal market of over 500 million people. After a grim year in which the voters of France and Holland said no to the EU's new draft constitution, and sluggish economies in France, Italy and Germany sent European morale drooping, Europe itself can now claim to be back on track.
There may also be a useful knock-on effect from the EU budget deal that could help unblock the world trade talks in Hong Kong, which have stalled on the issue of EU food export subsidies. The EU negotiator Peter Mandelson now has an extra inch or two of wiggle room in Hong Kong, since France, which has been blocking any relaxation of the EU position on farm subsidies, now knows exactly what its EU outlays will be over the next 7 years, and may just be able to modify its position.
In national terms, the new German Chancellor Angela Merkel came out of the Brussels summit process as a real star, a pivotal player in reaching the final deal. It was her agreement to increase the overall budget sum by a fraction, which means Germany will pay slightly more, which allowed the compromise to be reached.
France's Jacques Chirac can claim to have whittled back the British rebate, won 20 years ago by Margaret Thatcher, as a major strategic victory for France over "les Anglo-Saxons." But this also means that he can no portray Britain as the problem, and the whole of Europe now knows that French intransigence over farm subsidies was and will remain the most contentious issue.
And Blair can claim to have crafted a deal that keeps Britain at the heart of Europe, rather than isolated, with its strategic links intact to the new member states of Eastern Europe who owe their membership to Britain's long campaign to enlarge the Union. Blair also secured a commitment to further enlargement, persuading the EU to accept that the tiny Balkan state of Macedonia, formerly part of Yugoslavia, should now become a formal candidate for EU membership.
"If we believe in enlargement, we had to do this deal now," Blair told reporters after the deal was reached. Failure, Blair added, "would wrecked our relations with the eastern Europeans, and with the new German Chancellor, and done immense damage to British national interests."
Britain will still get its rebate on its overpayments for the EU's controversial common Agricultural Policy, because Britain is a big food importer. But Britain will give up that part of the rebate that funds EU enlargement by financing roads, airports and infrastructure - otherwise, the rich country of Britain would have been in the bizarre position of getting funds from the poor EU members like Poland and Hungary.
Blair came immediately under fire from Britain's Conservative opposition who accused him of giving British taxpayers' money "to build sewers in Warsaw." In fact, Britain is giving up just 20 percent of the total $60 billions it will receive in rebates over the next 7 years.
Britain, as the richest of the EU's four big powers, will henceforth pay roughly the same net amount into the EU budget as France or Italy, and less than the Germans, even though British income per head stands at 118 percent of the EU average, while German income per head stands at just 108 percent of the average.
Germany, Holland and Sweden, the other big net payers into the EU budget, were happy with the deal because Blair succeeded in cutting the overall EU budget from the EU Commission's original proposal of $1,193 billions to the now agreed $1,034 billions.
The total cost of the EU budget will amount to just 1.045 percent of the total GDP of the EU's 25 member states. Over the years until 2013, the EU's farm budget will get $350 billions, and there will be $188 billion in development funds for the new EU member states. Foreign and humanitarian aid will get $60 billion, the same as the EU's administrative costs. And in a final modest success for Blair, the EU's scientific research funds have been saved from the expected budget cuts.
