Britain gives on rebate; agreement on EU budget

Britain gives on rebate; agreement on EU budget

	Published : Sat, 17 Dec 2005 22:05 By : James Rowe Print this Story

BRUSSELS: Leaders of European Union agreed Saturday on a seven-year budget, setting at rest a controversy that almost threatened the 25-nation bloc's unity after Britain gave up part of its claim on rebates so that the new east European members of the bloc can benefit economically.

The agreement reached after days of negotiations averted a financial crisis that beset the EU in addition to other setbacks like the rejection of a constitution by French and Dutch voters. Britain agreed to cut its rebate by 10.5 billion euros over seven years and raised the 2007-2013 budget to 862.3 billion euros, or 1.045 per cent of EU output against an earlier proposal of 1.03 per cent. In return, the EU countries, especially France, agreed to have a spending review in 2008-09, which may or may not bring in new cuts in the controversial agricultural subsidies.

Addressing a news conference in the wee hours, prime minister Tony Blair said, "This is about getting an agreement that allows Europe to move forward." He hoped the giveaway by Britain would launch a massive shift of resources to the 10 ex-communist countries, which have become members of the EU. Absence of an agreement would have prevented these members from using funds to modernise their economies and bring them on par with the other members'.

Britain had been insisting that it would not want to give up the rebate citing France had its farm subsidies in place until 2013.

Blair claimed the rebate will still rise over the next seven years and Britain's net payment to the EU will be in rough parity with those of France and Italy. He said anyway it was in the fairness of things that Britain pay its share to EU's well being.

However, he drew criticism at home over the giveaway. Conservative foreign affairs spokesperson William Hague said in London that seldom in the course of European negotiations has so much been surrendered for so little. "It is amazing how the Government have moved miles while the French have barely yielded a centimetre," he said.

Britain got the rebate in 1984 when Margaret Thatcher was the prime minister and it was the EU's second poorest member and benefited little from farm subsidies, which accounted for 70 per cent of the EU budget. The country is now second richest while the share of agriculture is 43 per cent.

Blair said the agreement provided for a comprehensive review of all EU spending and revenue in 2008-2009, which will offer an opportunity to modernise the budget and overhaul the farm subsidies.

EU president Jose Manuel Barroso expressed his happiness and said the agreement helped the EU to salvage its public credibility.

French President Jacques Chirac described the deal as "a good deal for Europe" and praised Blair's political courage in taking this decision.

It is widely believed that the new German chancellor Angela Merkel had played a crucial role in brokering the deal and offering additional funds to meet the needs of the new members. She gave 100 million euros extra for Poland, which was praised by Polish Prime Minister Kazimierz Marcinkiewicz and several other leaders.

Diplomats revealed that Merkel, in the face of budget deficits in her own country, had proposed the higher expenditure in a honest bid to avert a crisis.

EU leaders accepted Macedonia as a candidate for membership, but linked its entry to a debate on the EU's future and its ability to absorb more relatively poor newcomers.

It is unlikely that Blair woulmd have negotiated the EU budget and capitulated so easily had he been running for the next general election. It does seem to many that Blair is now putting his own legacy before the best interests of the British public.