Summit faces hard talks on UK rebate
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Your support makes all the difference.A crucial EU summit which starts today, threatens to turn into a protracted row over money, with Tony Blair having to fend off attacks on Britain's multibillion-pound rebate from the European budget.
With France and Germany deadlocked over how to foot the bill for EU expansion, the Danish presidency of the EU has threatened to prolong the two-day Brussels meeting into the weekend. And the French President, Jacques Chirac, will be able to raise the issue if the British budget rebate, if he chooses.
On Wednesday, Mr Chirac infuriated Downing Street by demanding a review of the rebate, guaranteed until 2006, and saying the UK's cheque is "less justified than previously". British officials believe France is putting up a smokescreen to fend off pressure from Germany to agree to a thorough reform of the common agricultural policy (CAP) from 2006. The central issue is how to pay for the 10 new states joining between the date of their accession in 2004 and the end of the EU's present budget in 2006.
When that financial plan was agreed in 1999, it was assumed six countries would join in 2002, which means a deal on how to redivide the cash must be done.
Germany, the EU's biggest paymaster, is blocking a plan to offer farmers from the new nations 25 per cent of the direct subsidies offered to their EU counterparts, phasing in the full 100 per cent over a decade. In exchange for agreement, Berlin wants an assurance from Paris, which is a big beneficiary of the CAP, that spending on agriculture will decline from 2006. But France now appears to be saying all spending issues must be addressed after 2006, including the UK rebate.
Diplomats are pessimistic about a breakthrough between France and Germany this week. One said: "The Germans have been asking the French for something for about a month and there seems little sign of movement." But Danish presidency sources said: "Our intention is to attack the most difficult questions head on. We have to find a solution, at the latest, before people leave Brussels. It may be a long meeting : the Danish delegation have booked rooms until Sunday morning."
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