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EU budget summit ends in deadlock
Brussels: The European Union budget talks collapsed after leaders failed to resolve a bitter dispute between Britain and France over the EU's long-term finances, with Britain rejecting a final proposal to have its EU rebate frozen to break the deadlock.

British Prime Minister Tony Blair made a change in stand on UK's part conditional to EU countries overhauling agricultural spending. The rebate is worth about Euro 4.6 bn to the UK annually. Blair argues it is necessary to balance the outsized agricultural subsidies that flow far more generously to France and other continental countries than to Britain.

France in particular insisted that Britain's rebate, won two decades ago by Margaret Thatcher, should be eliminated.

Diplomats said the Netherlands and Sweden also demanded relief, complaining their annual payments to the bloc are excessively high. The extent to which new EU members were prepared to go to clinch a deal, could be gauges from the fact that Poland, the Czech Republic and eight other eastern nations offered funds destined for them to their rich western partners.

The failure of the talks on the budget, for 2007-2013, deepens the sense of crisis triggered by the French and Dutch referendums in which voters rejected a proposed EU constitution. The current president of the European Union, Jean Claude Juncker, went to the extent of saying the Union was now in "a deep crisis".
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