WASHINGTON, Dec. 15 (UPI) -- The posturing is over and the haggling has begun at the European Union summit in Brussels, where Britain now counts on Germany to help craft a messy compromise deal on a trillion-dollar budget package.
Britain's Tony Blair is in the hot seat, as current holder (until Jan. 1) of the EU's rotating Presidency with the responsibility to propose a budget and then craft consensus among the 25 member states. But his seat is all the hotter since Britain's annual $5 billion rebate on its overpayments to the EU is now the most contentious issue.
Blair's latest budget proposal was predictably rejected by all the other EU leaders at the first session Thursday afternoon in the Justus Lipsius building in Brussels. Then came the haggling over dinner followed by a further negotiating session as the EU went into its traditional custom of working through the night.
EU summits are known to the weary officials as '2-shirters' or '3-shirters,' depending how many clean shirts they need to pack, regardless of whether or not they get to see their beds. They sometimes don't. The famous Nice summit in December 2000 was a 4-shirter, as French President Jacques Chirac fought hard night after night to ensure that his 60 million French citizens got the same voting weight in EU councils as the 81 million Germans.
Chirac will be fighting through the night yet again, to inflict a savage defeat on Blair, and above all to save the Common Agricultural Policy, who gives the lion's share of farm payments to French farmers.
But Chirac was 73 last month. He is now 5 years older, and had a brief stay in hospital earlier this year after what the doctors called a vascular problem, but which rumor suggests may have been a mild stroke. And after last month's riots in the Paris suburbs and his approval rating approaching single digits, he is not the man he was. The British strategy will be to count the beers that Chirac sips as the all-night sessions wear on, wait for his eyes to droop, and then pounce.
It will not be easy. The French fired a warning shot Thursday morning, when French foreign minister Philippe Douste-Blazy and his Polish counterpart Stefan Meller published a joint letter in the Financial Times, the house journal of the EU, that said Blair has "put forward a proposal that cannot become the basis of an agreement."
"Poorer member states are to make substantial further sacrifices while one member state, the United Kingdom, would see its position considerably improved," the letter went on. "As a matter of principle, such an approach cannot be the yardstick for an EU based on solidarity and fairness."
They key to the problem is that that both the British rebate, and its justification, the CAP (which makes Britain as a major food importer receive much less from in CAP subsidies than a food exporter like France), need to be reformed.
But Chirac three years ago secured for France a pledge from the entire EU that the CAP would not be changed until after the new 7-year budget period ends in 2013, so he refuses to budge. But the 10 new member states, mainly much poorer nations from Eastern Europe, mean the EU needs to spend more -- and the British rebate, famously secured by Margaret Thatcher over 20 years ago, is the obvious place to find the extra money.
Blair has offered a compromise, under which Britain will continue to get a rebate based on the CAP payments, but not on the whole amount, so that Britain in effect agrees to pay its fair share of the extra costs of EU enlargement. Over the next night or two of haggling over the sums and with some creative drafting and fudging of the language, many EU leaders think a compromise should be reachable. Britain has already offered to juggle the sums in such a way that the Eastern European countries should get an extra $500 million a year for the duration of the new budget.
The new German foreign minister Franz-Walter Steinmeier has said he believes agreement is possible on the British proposal, and Austria's Chancellor Wolfgang Schuessel went into the summit saying said he reckoned the 25 nations were on track toward a deal. And Blair's spokesman said Wednesday that there was "momentum" toward an agreement.
"It's going to be very tough and very difficult," Blair said, as he went in to the summit. "It is just as well to be frank about that right from the outset. It hangs very much in the balance."
Britain's latest proposal for the next 7-year budget period called for a total outlay of 850 billion euros, just over $1,000 million, which amounts to 1.03 percent of the EU's gross income, calculated by adding the GDP of all 25 member states. The EU Commission, the executive arm of the Union, had originally argued for a budget some $200 billion higher, of 1.24 percent of gross income. This was rejected by all the rich countries, Britain, France, Germany and the Netherlands included.
France has been able to rally support for its stand from the poorer Eastern European states, which want the total budget to be higher so that they can get more EU aid to build their roads and infrastructure. But this means that Blair should be able to get some discreet support from the other more prosperous countries who want to keep the total EU costs down.
Germany will be crucial, and this is the first summit for the new center-right Chancellor Angela Merkel, and an important first test of her skills on a Europe-wide stage. If Chirac flags after his third beer during the second all-nighter, which seems to be the British strategy, Merkel's decision whether or not to back a re-crafted proposal from Blair could carry the day.
Nobody, not even the French or the Poles, wants the budget decision to be held over onto next year, when Austria takes over the Presidency from the British. There will then be much less pressure on the British to compromise, since they will no longer be in the hot seat.
Ironically, if a deal is reached in the early hours of Saturday morning, it may not be final. The European Parliament, which has to endorse any budget package, has threatened to block the British proposal -- even if it finally gets the grudging approval of the 25 heads of government -- unless the overall sums available are substantially improved by at least 420 billion euros over the coming 7 years. But such threats from the Parliament do not always hold good, when faced with an exhausted EU Council who are all out of shirts and panting to get home to a shower and a bed.
