UK faces pressure over EU rebate

Britain was set to face some of the fiercest pressure in more than 20 years over its annual rebate from EU budget contributions as European foreign ministers got ready to meet yesterday to battle over how much they pay into and get out of the collective pot.

The ministers were to meet in Brussels over dinner yesterday to voice their positions on the EU's long-term budget before getting down to the hard bargaining at an official gathering today.

But many of the big EU countries have already made their positions known, making statements in recent weeks to the effect that they want Britain's coveted annual rebate reconsidered.

The leaders of France, Germany and Poland stepped up the pressure on Britain with a joint call on Thursday for the rebate to be reconsidered and changed.

On top of that, the EU's current Luxembourg presidency proposed that the rebate be frozen and progressively reduced, seriously calling it into question for the first time since the UK's then-prime minister Margaret Thatcher secured it in 1984.

A British diplomat here said that the proposal was "utterly unacceptable," insisting that "the British rebate, as far as we are concerned, is fully justifiable."

Other Brussels diplomats said that if it were not for the issue of the UK's rebate, the proposals by the Luxembourg presidency could probably break a deadlock over the overall EU budget.

"The presidency has done its work so well that technically it would not be very difficult to reach an agreement," a French diplomat said.

"The real problem is the British rebate," he added.

Luxembourg, a veteran broker in EU affairs, wants an agreement to be struck at a summit here of EU leaders on June 16 and 17 because otherwise the budget likely will languish once the UK takes over the EU's rotating presidency for six months in July.

The battle lines over the overall EU's budget for the period from 2007 to 2013 are roughly drawn between the European Commission which wants to have as much money available as possible, and the six biggest net contributors -- the UK, France, Germany, Austria, Sweden and the Netherlands, which want to limit the budget.

Luxembourg has proposed an overall budget for the EU in a range from 865 billion euros to 900 billion euros (US$1.085 trillion to US$1.129 trillion), representing the equivalent of 1.06 to 1.09 percent of gross national income (GNI).

The commission is angling for an EU budget of 1 trillion euros while the six main contributors have demanded that the budget be capped at 815 billion euros, or 1.0 percent of GNI.