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EU: Political, Budget Crisis Hangs Over Summit

The two-day summit of EU leaders opening in Brussels today looks set to disappoint hopes for a boost to European morale in the wake of the double defeat of the EU constitution in referenda in France and the Netherlands. The summit appears likely to order at least a temporary halt to the ratification process. It also looks certain to push the EU deeper into crisis by failing to agree on a budget for 2007-2013. Meanwhile, there are signs the public debate that EU leaders are belatedly calling for will put an end to the bloc's further enlargement.

Brussels, 16 June 2005 (RFE/RL) -- Speaking on the eve of the Brussels summit, the president of the European Commission, Jose Manuel Barroso, warned that the EU was on the brink of a permanent crisis unless it manages to win back the trust of its citizens.

Identifying lack of trust as the main factor in the defeats of the constitution in referendums in France and the Netherlands, Barroso called for a "pause" in the ratification process.

He said this is necessary to give Europeans a chance to debate the future of the continent, as well as to avoid "contaminating" future referendums by the French and Dutch reverses.
"[It's about] the question of identity, the question, 'How far can we go?' the absorption capacity of Europe."

"In view of the complexity of the situation and the probable contamination [of future referenda] by the two failed [French and Dutch] referenda, caution dictates that, collectively, we consider a period of reflection, a pause," he said.

The "contamination" fears appear borne out by polls in several countries yet to ratify the constitution, where public opinion is turning sharply against it.

On 14 June, British Prime Minister Tony Blair echoed Barroso during a news conference in Paris after meeting with French President Jacques Chirac.

"I think it would be sensible if we agreed, in view of the 'no' votes in France and Holland, that it would be sensible collectively to come to the view that we should have this pause for reflection over a period of months so that we can give Europe the debate it needs and then the direction it needs on the key issues: the economy and globalization, issues to do with security and crime," Blair said.

Barroso suggested yesterday that the debate should explore the shape of the "European social model" -- its adaptation to globalization, levels of protection, and economic growth.

Not all EU leaders share the call for a pause in ratification. Speaking before parliament yesterday, French Prime Minister Dominique de Villepin said the process should continue, saying that giving all member states the chance to express their views means "respect for democracy."

Meanwhile, Barroso said a deal on the 2007-2013 EU budget at the summit would go a long way toward helping resolve the EU political crisis. He appealed to member states not to "play the national card" in pursuit of their often conflicting interests.

He made a particular appeal to Britain, which is determined to hang on to its "rebate" won in 1984 by Margaret Thatcher and currently worth an annual 5 billion euros. The rebate is a return payment from the EU budget initially agreed in recognition of the fact that Britain, relatively poor in the 1980s, got little out of the EU's generous farm budget.

Barroso said Britain must recognize it is no longer entitled to such aid: "The situation is no longer the same that it was in [19]84, it is not same. Of course, there is a specific British problem, we know it and we respect it. But the situation is no longer the same and there are now 10 new members who are much, much poorer than Britain. And I'm sure that the British government recognizes that, that there is a new situation."

Isolated within the EU, Britain has indicated it may agree to freeze the rebate at current levels. However, it wants in return to slash EU farm subsidies, which account for 40 percent of the overall EU budget. This has pitted London in an increasingly public battle against France, which is the main beneficiary of the farm budget.

France says farm spending is secure from cuts under a 2002 deal with Germany that was subsequently endorsed by all EU leaders.

Barroso said a compromise could see Bulgaria and Romania included in the 2002 spending ceilings when they join in 2007. The roughly 8 billion euros in farm subsidies the EU expects to have to spend on the two countries annually would amount to nearly 20 percent of the overall farm budget. However, France is unlikely to agree to the move.

The prime minister of Luxembourg, Jean-Claude Juncker, who will chair the summit, appeared resigned to failure yesterday when he told the European Parliament he is "fairly certain" a deal on the budget will remain out of reach at the summit.

Today German Chancellor Gerhard Schroeder also said he had little hope that EU leaders at the summit would reach a deal on the budget.

This would, in all likelihood, mean the budget would be delayed until the Finnish EU presidency in late 2006, and the poorer new member states would correspondingly see their aid increases be put off by two years or more.

Barroso said the debate on the future of Europe must also take note of the citizens' concerns over enlargement.

"The debate over the future frontiers of Europe is a debate that is [already] going on in Europe, let's be frank," he said. "[It's about] the question of identity, the question, 'How far can we go?' the absorption capacity of Europe. In fact, in one of the last European Council meetings, it was already mentioned, for the first time, that in future, for future enlargements, we should also consider the absorption capacity of the European Union."

Barroso said that in his view the EU must keep the commitments it has already made, adding the "principle of good faith is fundamental in international life." This should mean that there should be "no revision of agreements already made regarding future enlargements."

The EU has signed accession treaties with Bulgaria and Romania, but its member states have yet to ratify them. Croatia and Turkey are candidate countries yet to begin accession talks. All of the Western Balkan countries have, in principle, been promised membership.

Not all member states share Barroso's enthusiasm.

De Villepin was quoted yesterday as telling the French National Assembly that while the commitments made to Bulgaria and Romania "will be kept," albeit with a stricter eye on the fulfillment of entry conditions, "beyond that we must certainly start a reflection with our partners...on the modalities of future enlargements."