Blair visits Budapest in effort to sell EU budget cuts to new members

Prime Minister Tony Blair, photo: CTK

Britain's prime minister, Tony Blair, was in Budapest on Friday trying to sell new European Union member states on a plan to cut their funding by 10 percent. As the current holder of the EU presidency, Britain has the task of getting agreement on a budget deadlocked by a dispute over a British budget rebate and French farm subsidies. With no-one willing to put more into the EU pot, Mr Blair is proposing cuts to the previously promised development money for Poland, Hungary, Slovakia, the Czech Republic and others. Kerry Skyring spoke to Ian Beg from the European Institute at the London School of Economics.

Prime Minister Tony Blair,  photo: CTK
"Mr Blair would be taking a political risk by forgoing the rebate but I think there is at least some recognition in the UK that circumstances have changed with the accession of the recently acceded new member states.

"It's well known in the UK that they are significantly less well-off than the UK is. What's perhaps not so well appreciated is that Britain has improved compared to other countries."

Mr Blair did say at the beginning of this negotiation that he would only negotiate on this if France came some way on the European farm subsidies - that hasn't happened.

"The way he can square that political circle is by saying, I'm giving in only in so far as I'm exempting the recently acceded members from paying, I am not exempting France from paying, we want the money back from France."

The central European states, nine of them I understand, have sent a letter saying they wouldn't accept the 10 percent reduction which was initially proposed.

"They feel quite some resentment because they were promised things in Copenhagen in 2002, told they would have to wait to receive them, and now they're being told, not only will you have to wait, you'll have to accept less than we promised you.

Photo: European Commission
"That's bad politics. They irony of it I would say is that it doesn't cost very much. The saving in structural fund spending in central and eastern Europe is not huge, even with a 10 percent cut."

Tony Blair comes to central Europe with a pretty good reputation, he fought for the central European states back in Copenhagen. Will he leave with that intact, will he leave with friends in central Europe?

"I do get the sense from some of the central European countries that overall size of the budget is not top of their list of priorities. Naturally they don't want to lose from it, but what is very important for them is to get a deal quickly, so that they can start spending.

"The absorption problem, the delays in making plans - that matters to them very much. They resent the idea that they are paying towards a British cheque, and that's something that Blair can deal with at no significant political cost. But if he tries simultaneously to say to them we won't let you off the rebate and we won't give you all the money you want, then he's going to lose friends."