EU leaders pressure Britain to accept rebate reduction

PARIS -- France and Germany led a fierce campaign by European Union leaders yesterday to persuade Britain to accept a reduction of its annual EU budget rebate to help reach a deal on the bloc's long-term finances.

British Prime Minister Tony Blair opened the way to a compromise by suggesting that a deal would be possible if EU leaders agreed to a major overhaul of the budget.

But tension was high after his finance minister said London could veto any move to cut Britain's multibillion euro rebate and French President Jacques Chirac ruled out any compromise over the big farm subsidies that France receives from Brussels.

In 1984, Britain won a European Union budget rebate as a subsidy from wealthier nations. The rebate was worth about 4.6 billion euros, or $5.6 billion, a year before the EU was enlarged last year.

A showdown on the budget is looming at an EU summit next week. Failure to agree the 2007-2013 funding program would ruin efforts to show the 25-nation bloc is back on track after French and Dutch voters' rejection of the union's planned constitution.

''I think there'll be a deal in the next week. . . . There is political pressure. It is easier to get a deal when there is pressure," European Monetary Affairs Commissioner Joaquin Almunia told reporters in London.

But asked whether a budget deal would be possible without British movement on the rebate, German Chancellor Gerhard Schroeder said after talks in Luxembourg: ''That will not be possible, given that all must make compromises."

Luxembourg Prime Minister Jean-Claude Juncker, who holds the EU presidency until the end of this month, is meeting EU leaders individually to try to broker a deal. But each side is taking a tough position over the budget, fueling tension over the constitution, intended to make the enlarged bloc run more smoothly.

Dutch Prime Minister Jan Peter Balkenende, weakened by Dutch voters' rejection of the charter, reiterated his country's demand for a cut in its contribution to the EU's budget but refused yesterday to say whether it would veto a deal.

Britain won its rebate under Prime Minister Margaret Thatcher, when it was one of the poorer EU countries and received little back from the European Union in farm subsidies, which at the time made up 75 percent of the EU budget.

Britain is richer now but says that even with the rebate its net contribution to the EU is much greater than that of France.

Chirac, who will host Blair on Tuesday, reached a joint position on the budget with Schroeder at talks in Paris. ''Our British friends must be aware of how things are changing and therefore of the necessity of a greater fairness in the burden carried" by members, Chirac said.

He ruled out any reduction in EU subsidies to French farmers, saying: ''I am not willing to compromise".

Swedish Prime Mnister Goran Persson backed Paris and Berlin, saying after talks in Copenhagen that other EU member states also want the British rebate to be gradually reduced.