[A-List] EU integration struggles: Britain vs. France

["Michael Keaney" <michael.keaney@xxxxxx>]

Chirac in call for Britain to lose EU rebate
By Stephen Castle in Brussels and Nigel Morris
The Independent, 23 October 2002

The French President, Jacques Chirac, caused a fierce argumentwith Britain
yesterday by demanding the UK dips into the annual £2bn rebate it gets from
Brussels to help pay for the EU's expansion.

The call, which provoked a furious reaction from Downing Street, marks the
start of a new assault on the British budget rebate, just as EU leaders face
crunch talks on Thursday on how to finance the admission of 10 new nations.

Negotiated by Margaret Thatcher in 1984, when she told European leaders "I
want my money back", the rebate is intended to compensate the UK for the
relatively small amount of income its gets from the EU's Common Agricultural
Policy.

Its existence is guaranteed until 2006, and Tony Blair wants it to run well
beyond that. But Mr Chirac's comments are a sign of the pressure that will
be put on the Prime Minister to agree to its abolition or reduction.

Speaking in Paris, Mr Chirac said the EU's 15 members must examine "all
spending", including the British rebate, which he said "is less justified
today than previously". Mr Chirac did not specify what timescale he wants
for the rethink, or whether he plans to raise the issue at Thursday's summit
in Brussels. .

The Prime Minister's official spokesman said the rebate was "absolutely not
negotiable" because agreement on its details had been renewed by EU heads of
state in 1999. The UK pays more to the EU than it gets back and is the
second biggest contributor after Germany, he said.

Mr Chirac's intervention comes as France, which is a big beneficiary of the
CAP, faces acute pressure from Germany to agree on a pledge to reduce farm
spending. Berlin, the EU's biggest paymaster, is stalling on a plan to
subsidise farmers from the 10 countries joining the EU from 2004 to 2006. In
exchange, it wants France to agree to curb agriculture spendingafter 2006.

One theory is that France is trying todistract attention from the issue. A
Whitehall source said: "We know what Chirac is up to but it won't work. He
is on the back foot over CAP reform and he is trying to keep his options
open by attacking the British rebate." Michael Ancram, the shadow Foreign
Secretary, said: "President Chirac is obviously trying to hide his selfish
interest in resisting CAP reform by making the British rebate a
smokescreen."

In 2006, however, the UK may have to accept some change to the rebate if it
wants reform of the CAP and a more rational formula for funding the EU.
Little was achieved during the last negotiations in Berlin in 1999, with the
UK refusing to debate the rebate and France obstructing CAP reform.

Farm spending is declining as a proportion of the EU's budget --reducing
Britain's case for compensation - and any further changes to agriculture
would improve the British position.

There are new political difficulties too: some of the 10 new countries
joining the EU have voiced astonishment that they will have to contribute
towards the rebate. Poland, where average income is only 40 per cent of the
EU average, will have to pay a contribution of ?232m (£147m) to Britain in
2004, the first year of its membership.

But the UK remains one of the EU's biggest paymasters. Its net contribution
to the EU is normally about £2.6bn, which makes it the fifth biggest
contributor after Germany, the Netherlands, Germany, Austria and Sweden. The
Government said that without the rebate Britain's payments would be four
times higher than the Italian or French contributions.

The Downing Street spokesman said: "There are clearly going to be a number
of issues that are going to have to be settled in the context of the
enlargement discussions. Reopening the British rebate is not one of them."

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Summit faces hard talks on UK rebate
By Stephen Castle in Brussels
The Independent, 24 October 2002

A crucial EU summit which starts today, threatens to turn into a protracted
row over money, with Tony Blair having to fend off attacks on Britain's
multibillion-pound rebate from the European budget.

With France and Germany deadlocked over how to foot the bill for EU
expansion, the Danish presidency of the EU has threatened to prolong the
two-day Brussels meeting into the weekend. And the French President, Jacques
Chirac, will be able to raise the issue if the British budget rebate, if he
chooses.

On Wednesday, Mr Chirac infuriated Downing Street by demanding a review of
the rebate, guaranteed until 2006, and saying the UK's cheque is "less
justified than previously". British officials believe France is putting up a
smokescreen to fend off pressure from Germany to agree to a thorough reform
of the common agricultural policy (CAP) from 2006. The central issue is how
to pay for the 10 new states joining between the date of their accession in
2004 and the end of the EU's present budget in 2006.

When that financial plan was agreed in 1999, it was assumed six countries
would join in 2002, which means a deal on how to redivide the cash must be
done.

Germany, the EU's biggest paymaster, is blocking a plan to offer farmers
from the new nations 25 per cent of the direct subsidies offered to their EU
counterparts, phasing in the full 100 per cent over a decade. In exchange
for agreement, Berlin wants an assurance from Paris, which is a big
beneficiary of the CAP, that spending on agriculture will decline from 2006.
But France now appears to be saying all spending issues must be addressed
after 2006, including the UK rebate.

Diplomats are pessimistic about a breakthrough between France and Germany
this week. One said: "The Germans have been asking the French for something
for about a month and there seems little sign of movement." But Danish
presidency sources said: "Our intention is to attack the most difficult
questions head on. We have to find a solution, at the latest, before people
leave Brussels. It may be a long meeting : the Danish delegation have booked
rooms until Sunday morning."