Search

This article previews the European Union's budget summit, scheduled for June 16, 2005. The EU summit is bound to be fraught, because it followed the French and Dutch referendums that decisively rejected the EU constitution. But France's president, Jacques Chirac, then cleverly changed the subject, by demanding that Britain make a "gesture of solidarity towards Europe"--and give up most of its budget rebate. The summit, which began after "The Economist" went to press, looks highly unlikely to agree on the budget. But it is worth asking why the rebate suddenly became so contentious. The EU budget, at just over $120 billion is quite small. But because almost half goes on the common agricultural policy (CAP) and a third on regional aid, it gives rise to widely different net contributions and receipts. Mr Chirac's real worry is that the rebate is growing, and that France pays disproportionately towards financing it. Commission forecasts show that, by 2013, Britain's net contribution might even fall below France's. Britain is exploring how to refund their share of the rebate, a suggestion also made this week by Peter Mandelson, the British commissioner. Yet British Prime Minister Tony Blair has a grievance too: that the budget negotiations, which are meant to set spending ceilings from 2007 to 2013, have omitted the biggest item: the CAP.