EU budget: France and Poland to mug UK

Tony Blair will come under intense pressure to give up more than €8 billion in cash from Britain’s annual EU rebate as Europe’s leaders meet in Brussels.

Poland and France are seeking to mug Britain for a cash sum of up to €6bn, a pre-condition for a budget deal that holds a gun to the UK leader’s head.

Blair, holder of the EU’s rotating presidency for another two weeks, must broker tough and extended negotiations on Europe’s financing for 2007 to 2013.

France and Poland have joined forces to pile pressure on Britain to pay more towards the cost of last year’s EU enlargement from 15 to 25 member states.

Paris and Warsaw are urging London to come up with a package that trims a 21-year UK annual ‘abatement’ – currently worth €5bn a year and set to rise – by taking out any calculation against expenditure in the new member states.

Writing in FT Europe, French and Polish Foreign Ministers Philippe Douste-Blazy and Stefan Meller ask for an extra British contribution.

“The UK has been a champion of enlargement. We trust it will also be willing to cover the costs it presents,” they write.

“More specifically, the UK should agree that the abatement cannot be calculated on the expenditures in the new members, with the possible exception of common agricultural policy market expenditures.”

Horse trading

Blair is expected to offer up more on Friday afternoon presenting a new ‘financial perspective’ edging the UK sweetener on cuts to overall expenditure up from €8bn towards the €14bn demanded by France.

Reports in the British press indicate that Blair may be ready to increase the UK contribution to €10bn.

London on Wednesday unveiled a €849bn EU expenditure package for 2007 to 2013 peppered with giveaways and spending breaks to new, and some old, EU member states.

The new proposals seem to have soothed some new Eastern EU members and played down protests from old European countries such as Spain and the Netherlands.

Berlin role is crucial

Germany’s role over the next 48 hours, as Europe’s leaders haggle face-to-face, will be critical in finding an EU budget deal that all governments agree must be found.

German newspapers report that Berlin and Paris have prepared a joint paper in the run-up to the budget summit.

The joint-text aims at a balancing shares of the cost of EU enlargement with a 2003 deal that froze Europe’s agriculture budgets.

Both Berlin and Paris have signalled willingness to compromise over a review clause, which could reassess the budget situation in 2008.

In the mix

Key factors will – as traditional in European spending – have nothing to do with the budget but involve trade-offs on other hot EU topics.

France – if Berlin backs a London compromise – could secure extensions to reduced VAT rates on the country’s beloved restaurants until 2010, at least.

The UK may even be prepared to give up an opt-out on EU working time rules, according to some press reports.

Timetable

Europe’s leaders kick off Brussels budget battles on Thursday evening with a traditional encounter with European Parliament President Josep Borrell.

He will warn Europe’s leaders not to take MEP support for granted on an EU budget deal that cuts expenditure to new Europe – parliament has a veto on any financing agreement.

EU heads of state and government will begin a working session focused on Europe’s challenge from ‘globalisation’ – economic and international change.

European Commission President José Manuel Barroso and EU foreign policy chief Javier Solana will brief leaders on progress following an informal EU summit on October 27.

Pre-cooked and uncontroversial draft conclusions, prepared by foreign ministers on Monday will also be discussed.

Menu

EU budget wars are on the menu for dinner – a meal based on British cuisine and food – and based on pre-prandial soundings, current UK proposals are indigestible without a further sweetener.

At a separate supper, Europe’s foreign ministers discuss the Middle East with the aim of preparing an EU declaration.

Friday will be devoted to Europe’s ‘financial perspective’ for 2007 to 2013.
 
Tony Blair as EU president, and UK leader, is expected to table a final budget bid in the afternoon after one-to-one sessions with other heads of state and government.

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