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Tough Budget Negotiation to Top EU Summit Agenda

On the eve of a European Union (EU) summit, to be held Thursday in Brussels, British Prime Minister Tony Blair made a four-nation Europe tour to prepare his country for taking over the rotating EU presidency.

On Monday, he first met with Russian President Vladimir Putin in Moscow to seek Russia's support for the agenda of a summit of the Group of Eight industrial nations on July 6-8.

Moscow recognized "the need to reassure the rest of the world that the movement for democracy continues, that they are addressing human rights concerns, and that they are also addressing the concerns of investors."

The Russian government also expressed its support for US and EU efforts to persuade Iran not to develop nuclear weapons and for the implementation of democracy in Iraq and Afghanistan.

Then, within two days, Blair flew from Moscow to Berlin and Paris, passing by Luxembourg, which will pass the rotating EU presidency to London on July 1, shadowed by the French and Dutch rejection of the EU constitutional treaty and British-French "sharp disagreement" on the EU budget over the 2007-2013 period.

The tough EU budget negotiation, which will top the agenda of the upcoming EU summit, seemed to become more difficult after Blair firmly rejected a long-term freeze on Britain's 4.6-billion-euro (about US$5.58 billion) EU budget rebate, put forward by Luxembourg Prime Minister Jean-Claude Juncker.

The European Commission, the EU's executive arm, had aimed at a budget of € 994 billion (about US$1.2 trillion) over seven years, excluding special EU aid payments to the developing world.

The figure had been whittled down to about € 870 billion (about US$1.05 trillion) by the Luxembourg presidency.

Furthermore, the so-called "gang of six net contributors" -- Austria, Britain, Germany, France, Sweden and the Netherlands -- which requested the EU budget to be frozen at 1 percent of the bloc's gross domestic product (GDP), wanted to cap the figure at about € 800 billion (about US$968 billion), while 10 new member states from Southern and Eastern Europe hoped to maximize their regional aid.

Juncker believed that the biggest hurdle to a compromise was Blair's rejection of the freeze on the rebate that Britain won in 1984, when it was one of the poorer EU countries and got little back from Brussels in farm subsidies which at the time made up 75 percent of the EU budget.

When meeting French President Jacques Chirac in Paris on Tuesday, Blair reiterated that he will agree to renegotiate it only if there is further big cuts in overall budget, referring to the direct subsidies to farmers under the Common Agricultural Policy, which amount to more than € 300 billion (about US$363 billion), or some 40 percent of the entire budget.

France had ruled out the possibility of cutting these agricultural subsidies, of which French farmers are biggest beneficiaries, and insisted that they should be kept intact until their expiration in 2013.

Blair pointed out that it was wrong to spend 40 percent of the EU budget on agriculture, pleading for more spending on research, technology, science and development.

"It is difficult to see these differences being bridged," he said, pledging to continue discussion with the Luxembourg presidency.

The Luxembourg presidency looks the "British check" as the "psychological key" to reaching a deal, for it is worth less than € 5 billion (about US$6.05 billion) a year out of the EU's annual budget of some € 100 billion (about US$121 billion).

But Blair stressed the need to reconnect the Europeans' priorities with the way they spend the money in Europe.

In response to Chirac's call for avoiding new "financial difficulties to the current political crisis in Europe" and for "a fair and reasonable agreement," Blair said, "It is better to get the right deal than a slapped-together compromise that does not work."

He also called for a period of reflection of some months for Europe in the wake of the French and Dutch "no" votes on the EU constitution.

"If there was a referendum in most parts of Europe at the moment, the answer would be 'no'," Blair said, affirming, "The response should be to reconnect the priorities of the European Union with the priorities of the people of Europe ... so that we can give Europe the debate it needs and the direction it needs."

"If we were to set out some of that forward path and direction, then I think it would be a lot easier to persuade people why it's necessary also to have a new set of rules to govern Europe," he added.

(Xinhua News Agency June 15, 2005)

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