CRITICISM PROMPTS BRITAIN TO PROMISE NEW PROPOSALS

EU leaders are trying to break a deadlock over the budget before a summit next week. Can they? It looks increasingly unlikely, observers say.
British Foreign Secretary Jack Straw agreed this week to make new proposals to try to break the EU's budget deadlock, after his counterparts poured scorn on offers already on the table.
 
In closed-door "conclave" talks, nearly all of Straw's colleagues gave the thumbs down to proposals made Monday, with Britain's budget rebate -- described by one minister as a "diabolical instrument" -- the key sticking point.
 
Britain, which holds the EU's rotating presidency, is racing against the clock to broker a deal on the 2007-13 budget ahead of a summit of EU leaders next Thursday and Friday in Brussels.
 
EU budget commissioner Dalia Grybauskaite, who was reported to have questioned whether Britain could be an honest broker, joked afterwards that "an honest broker is supposed to find a solution and unite member states."
   
"The (British EU) presidency today achieved the first step of unity in criticism against them," she quipped.
 
Visibly uneasy, Straw responded by saying: "But the criticism was coming from different sides, and that's what gives me hope" that a deal can be reached.
 
New proposals to break deadlock
 
Amid the resounding disapproval, Straw said that British Prime Minister Tony Blair would hold consultations with other leaders in the coming days to break the deadlock ahead of the summit.
 
"We are going to let colleagues know as quickly as possible in the light of those consultations when next week, and obviously it'll have to be early next week, we are able to issue further proposals," he said.
   
On Monday, Straw presented London's new proposals to resolve the standoff, seeking to cap overall EU spending at 1.03 percent of the 25-member group's gross national income.
   
Britain would forgo 8 billion euros over seven years of its cherished annual budget rebate, but most of the savings would come from a seven to eight percent cut in planned funds for new member states.
 
Britain very isolated
   
The plans to slash aid to the former communist countries in central Europe have triggered howls of protest, and not only from the affected countries.
  
Describing Britain as "very isolated," French Foreign Minister Philippe Douste-Blazy called for London to make deep cuts in the multi-billion-euro rebate.
   
"The rebate has to be cut by 14 billion euros so that Great Britain pays its fair share of enlargement excluding spending on agriculture. They're proposing eight, that's unacceptable," he said.
   
Straw replied, he would be willing to take that step, if France agreed to slash farm subsidies. But France even refuses to review the agricultural budget in 2008, said Mr Straw.
 
Need for new direction
 

EU leaders failed in June to agree on funding, split over Britain's refusal to give ground on its rebate and French resistance to reform of generous farm subsidies, of which Paris is the main recipient.
 
Spanish Europe Minister Alberto Navarro also stressed that concessions on Britain's rebate were key to any agreement.
 
"We hope there will be a very clear proposal which goes in another direction which covers ... the problem of the British cheque," he said.
   
"There will not be an accord if we don't find a solution to the British cheque," he added, describing the rebate as "a diabolical instrument".
 
Double standards
 
EU commissioner Grybauskaite underlined that the British proposals so far amounted to "double standards ... dividing one policy for 15 member states and one for 12" -- referring to the 10 EU newcomer countries plus Romania and Bulgaria, due to join in the next couple of years.
 
Germany's new foreign minister, Frank-Walter Steinmeier, took a softer tone on Britain's budget brokering, acknowledging that foreign ministers considered the current proposals as a starting point.
   
"The British budget draft is a basis we can work on," he said. "There are some parts that suit us well, there a some parts that urgently need changes. But overall the discussions could lead to a successful end."
 
He welcomed the British proposal to freeze the volume of the overall budget. That would mean less payments for Germany and other net payers.