EU budget talks

Britain's row with France over the Ј3.2bn EU budget rebate escalated yesterday when Tony Blair called on Jacques Chirac to be "realistic" about his demands for a British gesture.

Setting the scene for a chilly encounter between the two leaders in Paris today, Mr Blair said he would be "diplomatic but firm" in insisting that France give up some of its generous &to=http:// ' target=_blank>EU agricultural subsidies if Britain is to give ground, reports the Guardian Unlimites.

Calling for fellow European leaders to agree to a budget fit for the 21st century at a European summit later this week, Mr Blair said after talks with Vladimir Putin: "We are happy to have this discussion but it has got to be on a realistic basis and it cannot be on the basis that ignores the reasons that gave rise to the existence of the rebate."

Britain signaled willingness on Monday to compromise on its multi-billion-euro EU rebate, but has insisted that France also budge on the agricultural subsidies it receives.

Ahead of their meeting, Blair traveled to Berlin for talks with German Chancellor &to=http:// ' target=_blank>Gerhard Schroeder, who has joined Chirac in pressing Britain to give up its rebate.

At a news conference the leaders showed few signs of backing down, with Schroeder demanding his European partners give up their "national egotism" to seal a deal and Blair responding sharply to the German leader's call for a "fair compromise."

"Of course everyone wants a deal that is fair," Blair said. "But we have to look at fairness in respect of the whole way Europe is financed."

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