The EU's Sudden Power Shift.

This article shows that even though just YESTERDAY Britain was losing the battle against the greedy and money-grabbing French over the EU budget, the balance suddenly shifted in Britain's favour, leaving Britain to suddenly grab ANOTHER victory against the French.

The EU's Sudden Power Shift

British Prime Minister Tony Blair has just turned the tables on France in the debate over the EU budget, and he did it in a way that fundamentally alters the power balance within the European Union.


British Prime Minister Tony Blair successfully turned the balance of power within the European Union on Dec. 2. As recently as three hours ago the conventional wisdom in Europe was that Britain was isolated on the top-rung topic of the budget, specifically that the other 24 EU members would not flinch in their demand that London must abandon the budget rebate that it secured in 1984 without condition. At that time, then-Prime Minister Margaret Thatcher stymied all EU development until the other members agreed to refund Britain substantial sums from its budget to account for the fact that Britain was not a beneficiary of the Common Agricultural Policy (CAP), the union's system of agricultural subsidies, which absorbed approximately half the budget.

London's chief opponent on this issue has been Paris -- which not only is the largest CAP beneficiary, but also has arranged to remain that way until 2013 despite the fact that its farmers are the RICHEST in the union. Blair's recent insistence is that he will not give away the rebate until Paris gives away CAP funds. Since French President Jacques Chirac depends on the support of France's politically critical farmers to retain any semblance of power, the dispute created an impasse that not only made the union's June summit devolve into a shouting match, but also helped to stymie all EU progress in general.

The situation was bad enough for Blair before, but with 10 countries joining the European Union in 2004, it was about to get worse. Without a change in the rebate schedule, the new poor members would soon be responsible for shouldering part of the rebate burden. It is one thing to try to take away subsidies from Europe's most subsidized -- yet already richest -- farmers, it is quite another to take cash from the European Union's poorest members. London had lost the moral high ground.

No more. Blair on Dec. 2 proposed that Britain surrender part of is $7 billion rebate -- specifically the portion that the newer members would be responsible for paying. While meeting with the Polish, Czech, Slovak and Hungarian leadership, he proposed that Britain will not include any development aid to the 10 new members when figuring the amount of the rebate that Britain is currently entitled to.

In exchange the Central European leaders issued a joint statement that they would only support changes to the EU budget if there were a full reform of the entire issue -- including both the British rebate and the CAP. In short, the Central Europeans wholesale adopted the British position.

Such a position is clearly in their best interests -- something that Blair undoubtedly was counting on when he crafted the proposal. If, as Blair is proposing, the CAP is slimmed down, normally that would reduce payouts from the Central Europeans. However, if France's exceptionally large proportion of the CAP is reduced to more appropriate levels, the Central Europeans pick up the balance. Under Blair's proposal, they get more money for agriculture and more development funds. Simply put, Blair bought their support.

This hardly means that a budget agreement is in sight; France is not known for backing down -- even when it is isolated and all 25 EU members enjoy veto power over the budget. And back home in London any reduction of the extremely popular rebate is going to be a hot-button issue. But Blair has framed France as the power stealing from the poor and put himself in the light of the poor's champion. The sudden change in perception will dominate at the European Union's midmonth summit and leave Paris holding the bag for stalling progress in the European institutions that have been the keystone of its foreign policy for the past generation. No small feat.

But bear in mind that for Britain -- and for France -- the budget debates are the struggle over the European Union in microcosm. London wants the EU powers to be as few and weak as possible, while France wants them robust and at its disposal. In securing Central European support for a proposal that shrinks the European Union's overall scope and reduces Paris' centrality in all things European, Blair has advanced the British cause immeasurably, even without a final budget accord. . . .
Wow, this is going to get really ugly by the sound of it. Especially with both leadership parties' political life hanging in the balance.

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