Brussels in Crisis EU Summit Collapse is 'Historic Failure'

With France and Britain showing a complete unwillingness to compromise on the European Union's next budget, a major summit in Brussels collapsed on Friday. The EU is in a rut and it's not clear how it will get out.

Jean-Claude Juncker wore a gloomy expression on his face, marked by the strain of a 15-hour marathon session of negotiations. The Luxembourg prime minister had to concede Friday night that the European Union had yet another fiasco on its hands with the failure to find an agreement on the union's next budget.

"Europe finds itself in a deep crisis," he said at a press conference following the two-day summit in Brussels. The council had been "very close to a deal" and "differences were minimal, which is to say that some delegations did not have the political will to succeed." In other words: The European Union summit meeting had failed.

All day long, the leaders of the 25 member states of the crisis-ridden EU haggled non-stop over money. They attended working meetings, dinners, tete-a-tete meetings in pairs and small groups - all in an attempt to find a compromise deal on how to fill the EU's coffers in the future and then how deep each member state would then be able to dip its hands into the cookie jar. But those efforts were in vain. Britain remained steadfast in its unwillingness to accept any cuts to the annual rebate it has received on the EU budget since 1984 unless Brussels reduced its massive agricultural subsidies program. But the French were equally obstinate, categorically rejecting that request.

Then, the Dutch ventured their own gamble. They demanded their own rebate in the form of cuts to their EU budget payments to the tune of at least €1 billion. They were offered a compromise of €700 million, but The Hague brusquely rebuffed it. Then the Swedes demanded a massive reduction in their EU contribution. By that point, the summit had reached an impasse.

Instead of sending out a signal that, even in times of crisis, Europe is capable of reaching agreement -- as German Chancellor Gerhard Schroeder had hoped -- this European event ended as a debacle. "I'm sad," Schroeder said.

Luxembourg's Juncker, whose country currently holds the EU's rotating presidency, wanted to deliver proof to European citizens that "we provide answers and can negotiate." Instead, the opposite happened: The summit showed that the European community is deeply divided and is barely capable of acting.

Crisis brings opportunities

Nevertheless, it would be easy to exaggerate the situation. The fight over money isn't so bad that it will be impossible to resolve. There's still plenty of time to draw up a financial plan for the EU'S 2007-2013 budget period. Indeed, in the almost 50-year history of the European community, important decisions have almost always been made at the last minute. What is terrible, however, is the effect the fruitless summit is having in the media, which has deeply damaged Brussels's already disastrous image among the European populace. Planners intended for the summer summit in Brussels to mark a turn for the better - unfortunately, they instead got an historical failure.

The setbacks came early at this summit. Even before they were able to get to the budget, the most contentious issue on the agenda, the statesmen were forced to bury another European hope. Saying there would be an "intense period of reflection," Juncker announced a temporary suspension of the ratification process for the planned European constitution. The deal allows any country which has already begun its ratification process to bring it to completion. However, any country that doesn't want to provoke its citizens or its parliament with the symbolic European project right now, can also delay voting on the constitution as long as it wants. However, all sides ensured the other they would, at least in principal, stand behind the existing legal framework of the European Union.

At the same time, one thing is clear to all participants three weeks after the failed referenda in France and the Netherlands: the foundation and superstructure of the European project chiselled out in the paragraphs of the constitution will never live to see the light of day. Not that it was democratic principals that led politicians like Danish Prime Minister Anders Fogh Rasmussen to call for a "period of reflection" - it was about the fear of a backlash among Europe's voters.

Voters in Denmark, the Czech Republic and Ireland are also threatening to reject constitutional referenda. And in Luxembourg, where Juncker had staked his own political future on a constitutional referendum, he was already at risk of being swept out of office on July 10. Now, just in time, the diminutive Grand Duchy's parliament can cancel what might have been a catastrophic referendum just in the nick of time. For their part, the British long ago brushed their planned vote aside. And as long as Jacques Chirac is still enthroned in the Elysee Palace -- a term that could last until May 2007 -- there is no chance the French will return to their polling stations for a second vote. In Germany, President Horst Koehler has refused to sign the constitution until it is reviewed by the country's highest court despite the fact it has already been approved by both legislative chambers in Berlin - the Bundestag and the Bundesrat. This only serves to further overshadow the current dreary skies clouding the European landscape.

Where is Europe heading?

Later this week, British Prime Minister Tony Blair will succeed Juncker as the EU's six-month rotating president. In that role, it will be his job to resurrect a stumbling Europe. It's something just about everybody dreads. The reason: Blair and the most of his compatriots have a completely different vision of what they want in a European community than do Paris and Berlin. Recently, one Blair advisor, speaking to others at 10 Downing Street put it this way: "You have to take this Europe, dismantle it and then put it together again."

In some parts, there are fundamental differences in the contrasting visions. The social model favored by the Germans and the French, which is supposed to offer protection from the rigors of globalization, is considered antiquated by the British. Both the Scandinavians and the eastern European member states are following London's course. There are also differences of opinion in economic, defense and foreign policy.

Up till now, the European political actors have shirked any decisions on what direction the "European Train," as former German Chancellor Helmut Kohl called it, should be travelling in - should the next station be a large, liberalized market a la London or a political union to the taste of Berlin and Paris? The danger is that Europe's major powers, could block each other for years to come. In doing so, however, they risk maneovering the EU into a state of political and economic insignificance.

Though the chances are small, the temporary suspension of the budget fight could actually provide the EU with an opportunity. EU leaders could use their time in the coming months to contemplate totally new budget plans. Even in the final financing proposal, 40 percent of the budget still would have gone to agricultural subsidies. Despite strenuous savings efforts, those subsidies would only have been reduced by 6 percent.

Meanwhile, budgets for sectors like research and development and business development would have been trimmed by 40 percent. The EU promised its people that it would create rapid growth, modernize the economy and create new jobs. But that wouldn't have been possible with this budget.

Even the 10 new EU member states were anything but pleased with the budget compromise presented by Juncker. But in the 11th hour of the summit, even they sought to keep the summit from failing and turning into a debacle. In a dramatic plea, they offered to pay more into the budget out of their own national pockets in order to reduce the amount the British, Dutch and Swedish would have to pay. However, the proposal came too late to a ease the impasse.

The haggling of the older EU member states, "to the last percentage," as Czech Prime Minister Jiri Paroubek said, was "ridiculous and disappointing for, and completely incomprehensible to us, new member states."

Of all people, it was one of the summit's worst obstructionists, miserly French President Jacques Chirac who heartily agreed with the new member states. "We're in a pathetic situation."

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