LONDON, 4 December 2005 — Brokering a European Union budget to shore up his international credentials, while saving political face at home, is proving a delicate balancing act for British Prime Minister Tony Blair. A budget deal for 2007-2013 would bolster Blair’s EU credentials but he faces a battle to persuade Euroskeptic Britons that any change in its rebate mechanism, or rise in the UK’s contribution to Brussels, is not a surrender to France.
“It would be an absolute disaster for the UK government to give up the rebate or to face headlines that say it gave up the rebate,” said Richard Whitman, head of the European program at London’s Royal Institute of International Affairs.
Euroskeptic papers, political foes and even members of Blair’s Labor Party are poised to pounce on any change to the cherished rebate from Brussels that was won in 1984 by then Prime Minister Margaret Thatcher. The mass-selling daily The Sun on Thursday described as “treachery” any cut in the rebate without French agreement to future cuts in farm spending, while the Daily Mail’s front-page headline on Friday was “The Great Betrayal.”
But aware that the success of his EU presidency hinges on a budget deal, Blair may agree to a reduction in part of London’s annual rebate from Brussels, diplomats say. They say he is seeking a deal that will allow him to say he has preserved the part of the rebate tied to the Common Agricultural Policy (CAP), while foregoing another portion linked to EU enlargement.
Blair at least does not have to face another election. He won a third term in May and has said he will not seek a fourth. But any political hit over the EU budget would come at a time when his once iron grip on his party is loosening. Blair lost his first major parliamentary vote last month. It would also give valuable ammunition to a new leader of the opposition Conservative Party — to be elected next week.
“The government has secured no reform of the CAP, yet British taxpayers are set to pay yet more to Brussels,” said Graham Brady, the Conservatives’ spokesman on Europe. “ Blair, speaking in Ukraine on Thursday ahead of talks on the budget with eastern European leaders in Tallinn and Budapest, acknowledged he would take political flak whatever the outcome. “I will get attacked, probably from all sides, but then ... that’s part of political leadership,” he said. Some Labor members of Parliament are uneasy with any deal that does not include a fundamental reform of the CAP. “A one-sided deal will not be acceptable to MPs, even to pro-European MPs like me,” said former Europe Minister Denis Macshane.
Britain is proposing a smaller budget and a cut in spending on Europe’s poorest regions while offering to help the 10 new EU member states absorb funding more quickly. The proposed cut has angered the mostly former communist countries who have regarded pro-market Britain as their biggest ally in the bloc. As a champion of EU enlargement, Britain says it has been foregoing part of its rebate linked to the new member states since they joined in May last year. Blair may now offer to give up more of those funds or agree a mechanism by which London pays more toward enlargement. He could then claim he had defended the rebate on the CAP.
“The whole thing is so incredibly complicated that they are going to put a spin on it,” said Katinka Barysch, an analyst at the Center for European Reform think tank. “I’m quite sure the government will come up with some mechanism that makes this sound acceptable in Britain.”
Even if the new states agree, Blair will have failed to reform radically the EU budget and the CAP, falling short of his ambitions and potentially attracting more criticism. But he can point the finger at France for blocking reforms that may have facilitated a breakthrough in December World Trade Organization talks.
And if Blair gets close to a deal, he can expect to have Finance Minister Gordon Brown on side. Brown was mooted to have blocked Blair from doing a deal in June but, as a potential prime minister in waiting, Brown will prefer Blair to take the rap on the rebate. “There is a real advantage to laundering all this dirty linen now,” said Whitman.
