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Budget problems mar EU summit

EU leaders were to seek to agree to a united response to the "challenges of globalization" at a royal palace summit held yesterday, but less lofty wrangling over budget plans risked clouding the feast.

British Prime Minister Tony Blair hoped the one-day gathering, amid the Tudor splendor of Hampton Court near London, would help put the turmoil-wracked EU back on track, after a political double blow before the summer.

But he is equally determined that haggling over the bloc's 2007-2013 spending plans -- which collapsed into acrimony at a June EU summit after French and Dutch rejections of an EU constitution -- will be kept firmly off the table.

Blair has vowed to do his utmost to strike a budget deal before handing over the EU's presidency in December, despite few signs of movement on the key stumbling blocs: London's refusal to surrender its budget rebate, and France's refusal to budge over reform of the EU's generous farm aids system.

"Our idea is to first agree the right direction for Europe economically, then secondly to set out some new priority areas for European action and then thirdly ... to get a budget deal in December," he said on Wednesday.

"If we are able ... to do that, then we will at least have made a start at putting Europe back together again," he told EU lawmakers in Strasbourg, in a speech setting the tone for yesterday's summit.

For once, the leaders of the 25 nations that make up the world's biggest single market will try to put their respective national interests aside in favor of a public show of consensus on urgent economic change.

One potential concrete outcome is a consensus on the creation of a multi-million-dollar "globalization fund" to help workers throughout the EU adjust to new economic realities.

But the author of that proposal, European Commission chief Jose Manuel Barroso, also says bluntly that EU leaders need to realize the need to reform if the bloc is to stay ahead of emerging Asian giants like China and India.

"Europe needs a wake-up call," he told the Suddeutsche Zeitung, whom leftwing critics accuse of promoting the "neo-liberal Anglo-Saxon" economic model of Britain or the US.
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