Blair is the "First Emperor of Europe."

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Battling Blair takes fight to Chirac

The prime minister may find his reform plans frustrated under the British EU presidency, report Andrew Porter and Matthew Campbell

Tony Blair was at Chequers yesterday, plotting a fighting return to Brussels this week after being branded as “selfish” and “stubborn” by the leaders of France and Germany in early morning outbursts over the European Union budget crisis.

The prime minister was drafting the speech that he will give on Thursday to the European parliament outlining his plans for Britain’s six-month presidency of the EU, which starts on July 1.

Although President Jacques Chirac appears to have spectacularly sabotaged the British presidency by pushing EU leaders into open warfare at their summit in Brussels, Downing Street officials say that Blair will unrepentantly continue to argue for a “new Europe”.

“Blair will use the presidency to push forward his view that Europe in the future should be looking to put money into technology, research and development and developing skills rather than sinking it all in agricultural subsidies,” said a senior Downing Street source.

His reception is likely to be mixed, however. Jean-Claude Juncker of Luxembourg, the current EU president, said he would not listen to Blair’s speech as Thursday “is the national day of Luxembourg”. Nor would he give Blair any advice on how to handle the presidency “as clearly my advice is not appreciated”.

Juncker is seen by British diplomats as the pawn who did Chirac’s bidding at the Brussels summit on Friday in a series of “brown envelope” offers to poorer EU members in a manoeuvre to isolate Britain over its £3 billion annual budget rebate.

Having won over all the new east European members with budget concessions, Juncker proposed an offer that British officials say was clearly designed to be refused: a rebate freeze which Blair duly rejected — triggering the crisis.

Bertie Ahern, the Irish taoiseach, described the atmosphere as the summit broke up as “very hostile at the end, even bitter. It was the kind of meeting I don’t like to be at”.

Exhausted after 14 hours of tough negotiations, Blair and his critics traded insults at news conferences in the early hours of yesterday morning.

“We are in one of the worst political crises Europe has ever seen,” said Gerhard Schröder, the German chancellor. He blamed the “stubbornness” of Britain and Holland, which had also rejected the budget.

Chirac called Britain’s behaviour “pathetic”. Blair hit back that the French attitude was “bizarre”.

The French president’s success in isolating Britain to divert attention from his own political problems won him no immediate plaudits at home, however. French commentators were still concentrating on Blair’s success on Thursday in getting the Brussels summit to put the proposed EU constitution — rejected by French and Dutch voters — on the back burner for a “period of reflection”. French newspapers have even crowned Blair “Tony the First, emperor of Europe ”.

A senior French diplomat said that Chirac knew from the beginning of the summit that there would be no agreement on the budget and that domestic French politics had led him to pick a fight with Blair over the British rebate.

“Two weeks ago the French people said ‘no’ to a certain vision of Europe,” the diplomat said, referring to the widespread view of the constitution in France as a Trojan horse for economic liberalism. “Blair became a symbol of liberalism in France and so Chirac, who is anti-Blair anyway, could hardly do anything but attack.”

After the shock of the no votes in France and Holland, said the diplomat, the understanding was dawning among European leaders that the EU would have to change and that Chirac and Blair represented rival visions. “This summit was always going to be about posturing and locking horns before the real business begins — negotiating the way forward out of this mess,” he said.

“Failure to agree a budget is not a tragedy, although it is a shame for the British presidency which will definitely be weakened. But this is just the start of the big negotiation about what will come next and how Europe should be governed. Blair has some good ideas but is probably not going to get anywhere with them while Chirac and Schröder are still around because they think very differently about Europe.”

A British diplomat also said that Chirac had played to a domestic audience — but for slightly different reasons: “Accusing the British of being bad Europeans is a tactic as old as the hills but the circumstances have changed and it will not necessarily work this time. The French people know it is they who started this crisis by voting no to the constitution — not the British.

“Chirac is definitely very unpopular now and even his own party is unconvinced by his efforts to dodge responsibility.”

When the summit opened on Thursday, key pillars of the EU such as Germany and Spain were still hoping to resurrect the constitution. For his part, Junckers seemed keen to make the French and Dutch vote again. But the Dutch had no intention of doing so and Denmark, Portugal and Ireland had all suspended their plans to hold referendums.

With no agreement, Luxembourg was forced to abandon plans to issue a statement about the constitution’s future. Nothing coherent could be said.

Round one to Blair.

On Friday the focus moved to the new EU budget. It will not come into force until 2007 and there is still nearly a year before it has to be approved. But Chirac had already signalled that he intended to exploit it by demanding that Britain “reconsider” its rebate, and Blair had marked out his own square by saying that it was time to reform the common agricultural policy (CAP).

Horse trading went into overdrive. Behind closed doors Juncker offered so many sweeteners in the form of EU aid and deals to individual countries that one diplomat complained: “This isn’t a budget any more. It is a series of brown envelopes being handed out to different countries. It’s serial bribery.”

Chirac was at his most wily. First he was extolling the very agricultural subsidies that Blair wants to reform. “To say that agricultural spending is a thing of the past is not correct,” said Chirac. “In fact the CAP has been a great success.”

Blair stood firm. There would be no surrender of the British rebate, he repeated, without a “root and branch” reform of finances, including agricultural spending.

British diplomats at the summit argued their case: the CAP accounts for more than 40% of the European budget, but agriculture accounts for only 5% of EU jobs and 1.6% of economic output. Seven times more was spent on the CAP than on research, science and technology. Even French diplomats acknowledge in private that France has become addicted to its £7 billion a year agricultural subsidies — and it will take a lot more than pressure from “les rosbifs” to wean them off.

Then Chirac moved to outflank Blair. Departing from his previous stance of demanding that Britain surrender its whole rebate, he suggested that he could support a compromise of freezing the amount. It was a clever ploy designed to leave Britain to take the blame if Blair failed to accept the deal.

At 8pm on Friday Blair rejected the compromise because there was still no firm commitment to reform the CAP.

At 10pm there was a revised deal which was “even worse”, said Blair’s spokesman.

As the summit broke up, Juncker took his seat at a press conference with a face like thunder. “Some delegations, who shall remain nameless, lacked the political will to reach an agreement,” he said. Those who opposed the deal had taken a “sad and shameful” stance.

Chirac was visibly enjoying the moment of revenge on Britain. “The issue at stake was that everybody give a reasonable and fair contribution, in particular to pay for enlargement,” Juncker went on. “I personally deplore the fact that the UK refused to make this reasonable and fair contribution to the costs of enlargement. It wanted to keep its whole cheque.”

It was political posturing of the worst sort. Britain had not been alone in blocking the budget, which had wider concerns than the rebate. Sweden, Holland and Italy had supported Britain’s demand for reform of the EU’s finances, and Blair believes that other countries will follow suit.

However, in the welter of acrimony, the biggest and most personal divisions were between Chirac and Blair — and, as Aherne implied, the wounds will not heal easily. “Had the meetings ended an hour earlier, it would have been easier,” he said. “There were things said and sometimes it is not easy to un-say these things.”

Despite No 10’s fighting talk yesterday, the implications for Britain’s imminent presidency of the EU are gloomy.

In Germany Angela Merkel, who is expected to lead the conservative opposition to victory in federal elections in September, appears to have some sympathy for Blair’s campaign.

However, Chirac seems implacable. When he was asked how he thought the British presidency would proceed, he replied laconically: “It hasn’t started brilliantly, of course.” Editor : Arrogant ****, always he wants his selfish French elite vision. That's no way for Europe to proceed! p*** us off Chirac and will finish the job directly in France and destroy the next French EU presidency!