Despite a last-ditch bid Friday to break a deadlock between Britain and France over future EU financing, the UK rejected a French concession on an EU rebate, preventing the bloc from agreeing on a 2007 - 2013 budget.
Luxembourg's Juncker did what he could, but it wasn't enough
Current EU president, Prime Minister Jean-Claude Juncker of Luxembourg, called Tony Blair and several other EU leaders into a crisis meeting late in the day to make a final offer in order to secure an agreement for the budget. But according to British government spokesperson, the UK rejected the offer.
In refusing the offer, Britain said any change must be linked to reform of the bloc's farm subsidies program.
"It's clear that what the presidency is proposing doesn't clearly establish that link between any change to the rebate and reform of the budget, and the CAP (Common Agricultural Policy)in particular," Prime Minister Tony Blair's spokesman said.
Speaking after Blair had a private meeting withJuncker, he said the plan also contained an unacceptable request for additional funds from Britain.
Dutch Prime Minister Jan Peter Balkenende
The Netherlands, which has also wanted to reform the EU budgetary process, and lower its per capita contributions, also said it wasn't ready to accept an offer from Juncker of a contribution relief package of some 700 million euros ($860 million). After the decisive Dutch 'no' vote on the EU constitution, Prime Minister Jan Peter Balkenende (photo) is under intense pressure at home to cut contribution levels significantly.
Earlier in the day, French President Jacques Chirac had made it known he would accept a freeze on the UK's annual refund from EU coffers rather than the outright cut he sought if it helped clinch a package deal at the summit.
At issue is the rebate Britain receives every year from the EU budget, which was won in 1984 through the tough negotiation of then-Prime Minister Margaret Thatcher. The rebate is worth 5.1 billion euros out of a 106.3 billion euro EU budget this year and is projected to rise to nearly eight billion euros by 2013 if the mechanism is not changed.
Britain has said it will not accept any kind of change to the rebate agreement unless other EU expenditures, such as France's large agricultural subsidies, are also reexamined. France's Chirac has staunchly defended the agricultural subsides, but said earlier today he was ready to compromise.
"A freeze is not enough, but if it is a compromise, like all compromises, we'll have to accept that it doesn't make everyone happy," an aide to Chirac told reporters.
But a British official swiftly belittled the move.
"Graciously accepting an offer we rejected three days ago doesn't do it for us," a British official said. "We don't think it's much of a concession. It would mean us losing between 25 and 30 billion euros (over seven years)."
Constitution in tatters
Europe's grand plans for its first constitution lay in disarray in Brussels on Friday after EU leaders put the charter on hold for at least a year to win over deeply sceptical voters.
Leaders of the European Union consigned the charter -- crafted over four years as new ground rules for an expanded 25-nation alliance -- to the deep freeze after devastating ballot reversals in France and the Netherlands.
They abandoned a November 2006 deadline for ratification of the constitution, and set no new date for its adoption. The treaty must be ratified by every member state to come into legal effect. EU leaders decided to come back and check the treaty's pulse, but not for another year.
"We all agreed to come back to the subject in June 2006 to make an overall evaluation of national debates and to see how best to proceed with the process of ratification," Czech Prime Minister Jiri Paroubek said.
Still, most countries refused to declare the deal dead.
"I do not think Europe is in crisis," said Italian Prime Minister Silvio Berlusconi. "We should not dramatize the situation because, for the constitution we have time, we will see. But we have to explain it to our citizens."
Is there hope?
But there has never been a clear answer as to how the treaty can overcome the French and Dutch setbacks, even though it has been ratified by 10 member states. The Netherlands pronounced the last rites.
Dutch cows wear protest signs against the referendum on the EU constitution in Oosthuizen, 32 km north of Amsterdam. The Dutch word "Boe" refers to the sound cows make and, like the English "boo," signals disapproval.
"The Dutch were very clear in their 'no' and that's why we as a governement said that we don't see any chance for a second referendum," said Dutch Europe Minister Atzo Nicolai. "It is dead in the Netherlands, this treaty." And if it is dead in the Netherlands, then according to EU rules, it is dead everywhere.