Crisis in Brussels as EU leaders differ on budget

The European Union was plunged deeper into crisis on Saturday after its leaders failed to agree on a long-term budget, two weeks after the p...

The European Union was plunged deeper into crisis on Saturday after its leaders failed to agree on a long-term budget, two weeks after the proposed EU constitution was put on hold following French and Dutch rejection.

The summit breakdown threatens the enlarged 25-nation bloc with financial paralysis on top of the political uncertainty wrought by the double referendum defeats, unnerving financial markets and weakening the euro, the EU’s single currency.

Trading recriminations, many leaders blamed Britain for blocking a deal on the 2007-2013 budget by rejecting proposals to limit its annual rebate from EU coffers and demanding a reform of farm subsidies that most benefit France.

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But British Prime Minister Tony Blair was defiant, vowing he would only exchange a reduction in the rebate for an overhaul of EU farm spending.

Asked if others had tried to isolate him, Blair said, ‘‘If that was the attempt, it failed. We weren’t alone around the table in resisting this.’’

The Netherlands, Sweden and Finland also rejected the final compromise, seeking a bigger cut in their net contributions. Spain sought a longer phase-out of aid for its poor regions.

‘If the attempt was
to isolate me, it failed. We weren’t alone around the table in resisting this’
— PM Tony Blair

In a dramatic last-minute gesture, 10 mainly ex-communist East European states made a vain effort to salvage the deal by offering to forego some of the EU aid they are due to receive. The present deadlock is set to delay urgently needed public investment in their countries.

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French President Jacques Chirac said it was ‘‘pathetic’’ that poor countries had to offer sacrifices, but Blair said it was not a question of money but a matter of basic reform of the way EU funds are spent.

—Reuters