Blair faces tough negotiations over EU budget

British Prime Minister Tony Blair begins two days of crunch negotiations with European leaders on Thursday, hoping to end a deadlock over the EU's long term budget that risks paralyzing the 25-nation bloc. Blair's plan to slash the 2007-2013 budget and substantially cut aid to the new member states has been widely panned, and with only a week left to reach agreement he must now engineer a compromise.

Blair will hold a string of one-on-one meetings Thursday at his Downing Street office, with the leaders of Portugal, Finland, Slovenia, Sweden and the Netherlands. Blair's office said he planned to speak with Luxembourg Prime Minister Jean-Claude Juncker by telephone Friday, before meeting the leaders of Ireland, Greece and Spain.

All have rejected the proposals by Britain, which currently holds the EU's six-month presidency and failure to reach a deal at a Dec. 15-16 summit in Brussels, Belgium, could propel the bloc into a prolonged crisis.

"We are going to do anything we can, work as hard as we can to secure an agreement," Foreign Secretary Jack Straw said at a meeting of foreign ministers in Brussels Wednesday.

Britain has proposed a Ђ847 billion (US$993 billion) package for the seven-year period, trimming some Ђ24 billion (US$28 billion) off the deal proposed by former EU leader Luxembourg in June. It represents 1.03 percent of the bloc's gross national income.

Most of the cuts, some Ђ14 billion (US$16.5 billion), will be made in regional aid to the poorer 10 new countries that joined in 2004, angering the mostly ex-communist states in central Europe.

Britain's offer to cut its cherished budget rebate and pay Ђ8 billion more into EU coffers over the period to help fund enlargement has also failed to impress. France on Wednesday called for further cuts to the rebate and rejected Blair's demand for a review of farm spending in 2008.

Blair is braced for tough negotiations. His first meeting Thursday will be with Prime Minister Jose Socrates of Portugal, whose government has been deeply critical of Britain's EU presidency and says Blair has done virtually nothing since taking the reins in July. Finland has also rejected Blair's proposal outright, angry that it would triple its annual net payments to the EU, which currently stand at around Ђ200 million. Prime Minister Matti Vanhanen has called on Blair to come up with a new plan.

Sweden's Prime Minister Goran Persson dismissed the package as too "pro-British" and said he doubts it will be approved. "It is perhaps a starting point for a negotiation," he said.

Spanish Prime Minister Jose Luis Rodriguez Zapatero is also dead-set against the British blueprint, saying it would cut about 1 billion in aid to his country over the period, compared with the package proposed in June.

Greece wants a bigger budget, so that aid continues to flow to poor countries. "The sooner we have a solution, the better. We are sticking to our positions and bargaining hard," Finance Minister Giorgos Alogoskoufis said Wednesday. Failure to reach a deal would leave EU spending frozen at 2006 levels, which would leave no new aid money for either the poor regions of the EU or for emergency humanitarian aid projects around the world, reports the AP. I.L.