EU Leaders Struggle to Reach Agreement on UK Rebate as Summit Approaches

Strategic Insights -

President Chirac's call for a "gesture of solidarity" from the UK has become a major point of contention ahead of the EU summit next week. Despite the Luxembourg Presidency's compromise proposal, which would see the UK rebate frozen at 1997-2003 levels and then reduced from 2008, Italy's Silvio Berlusconi and Spain's Alberto Navarro have expressed concerns, threatening to veto the package unless their concerns are addressed. Meanwhile, the UK government has insisted that the rebate is necessary to correct the unfair distribution of EU funds.

Key Takeaways:

  • The UK rebate would be frozen at the average of 1997-2003, euro 4.6 billion, and then reduced from 2008, according to the Luxembourg Presidency's compromise proposal.
  • Italy's Silvio Berlusconi has warned that he would use his veto unless the package was revised to address Italy's concerns, mainly due to possible reduction in receipts from structural funds.
  • Spain's Alberto Navarro has said the UK would have to accept the rebate being reduced over time, but would accept the current package if it received compensation over five years for losing part of the cohesion fund.
  • The President of Luxembourg, Jean-Claude Juncker, has announced that he will present a new compromise on the 2007-13 finance package on June 15.
  • The UK government has stated that the justification for the rebate remains, as the UK deserves to be compensated for the relatively low share of EU funds it receives.
  • Tony Blair has stated that the UK could only accept a revision of the mechanism if the EU's entire spending priorities were reviewed.

Statistics:

  • The UK rebate would be frozen at euro 4.6 billion (1997-2003 average).
  • Spain would require compensation over five years for losing part of the cohesion fund.
  • The EU summit is set to take place next week, and a new compromise on the 2007-13 finance package is expected to be presented on June 15.

Sources:

  • Luxembourg Presidency's compromise proposal
  • Letter from Silvio Berlusconi to Jean-Claude Juncker
  • Statement from Alberto Navarro
  • Tony Blair's comments on the EU budget
  • Presentation of the new compromise on the 2007-13 finance package by Jean-Claude Juncker.