EU leaders' fight over new budget plan

A divisive fight over new spending plans Wednesday threatened to further undermine the European Union's credibility on the eve of an EU leaders' summit, a meeting that is key to showing the bloc can overcome a year of setbacks with agreement on a budget for 2007-2013. Much is at stake at the talks, led by Britain's Prime Minister Tony Blair, who is eager to get a deal on a new multibillion-euro EU budget to secure his own political legacy both at home and in Europe. Blair's attempts to push a new, slimmed-down EU budget have been met with widespread resistance, re-igniting a nasty battle with French President Jacques Chirac over Europe's future and alienating the British leader's allies at EU headquarters and in eastern Europe. European Commission President Jose Manuel Barroso, who had been a close ally, launched an emotional attack against Blair and his proposal, warning of serious consequences for EU unity if EU leaders fail to secure a deal.

"Does it not concern the British presidency that the strongest supporters ... to your proposal come from those who hold a narrow-minded, nationalistic, backward vision of Europe?" Barroso told the European Parliament in Strasbourg, France. "Isn't it strange that there is such a contradiction between the forward-looking, modern, open competitive view of Europe expressed by Prime Minister Blair and the lack of ambition of the British presidency proposal?" "Let's be frank ... some of the most less developed regions of Europe, they will not support an open, ambitious round of talks in world trade talks if there is not a good investment in the social and economic development of those countries," Barroso warned. Britain published its revised plans for the EU's budget on Wednesday, proposing a total package of Ђ849 billion, slightly higher than the Ђ847 billion (US$993 billion) tabled last week, including additional aid for several new member states but refusing to give up any more of its lucrative rebate.

The plan keeps in place deep cuts in aid to the 10 poorer member states that joined last year, a move that angered and bewildered not only the new states but also France, which is threatening to scuttle future expansion of the bloc as a result.

Failure to get a deal could propel the 25-nation bloc into a financial crisis and deepen the European public's disillusionment with the bloc following the French and Dutch rejections earlier this year of the EU's draft constitution. It also brings practical commitments of development aid to African countries at risk, which would damage the EU's international reputation.

It also would leave it to the next holder of the rotating EU presidency, Austria, to come up with a deal during a period when the bloc is struggling to maintain public support over plans to expand. Adding new EU members eventually would mean more EU aid to countries such as Croatia, Turkey and other Balkan nations that are waiting in the wings to join the club.

Douglas Alexander, Britain's Europe minister, told the European Parliament that a previous proposal that put EU spending at Ђ847 billion (US$993 billion) for 2007-2013, and that nearly all 25 EU governments rejected, formed the basis for the new budget plan as well.

The previous proposal had suggested a nearly 10 percent cut in handouts, about Ђ14 billion (US$16.5 billion), to the 10 new EU countries. The plan also offered to trim Britain's rebate, but not get rid of it, as demanded by France and others at a summit in June. Blair has offered to trim his country's cherished rebate by about Ђ1.2 billion (US$1.4 billion) a year over the seven-year period of the 2007-2013 EU budget. France and others have demanded at least a doubling of that.

Many countries are angry that Blair chose to cut aid to new member states while keeping the bulk of Britain's annual rebate, which stands at Ђ5.6 billion (US$6.6 billion) this year. They also want a reversal of the Ђ24 billion (US$28 billion) cut that Blair has proposed in the overall seven-year budget plan, reports the AP. I.L.

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