Saturday, June 11, 2005

France, Germany gang up on Britain

Shock news.

A crisis in the European Union sparked by French and Dutch voters' rejections of the EU's constitution worsened Friday when France and Germany ganged up on Britain ahead of an important summit next week meant to reorganize the bloc's budget for 2007-2013.

French President Jacques Chirac and German Chancellor Gerhard Schroeder, meeting together in Paris, told a joint news conference they wanted Britain to give up a hard-won 5-billion-euro ($6 billion) annual rebate it gets from the EU budget — something British Prime Minister Tony Blair has bluntly and repeatedly ruled out.

Actually, Blair was quite polite about it:

Mr Blair was stung into action by a demand from Mr Chirac that he should make a "gesture of solidarity for Europe" by giving up Britain's budget rebate. But Mr Chirac flatly rejected calls for France to give up generous EU farm subsidies.

Mr Blair publicly rebuffed Mr Chirac, saying that without the rebate Britain would be paying a "quite unfair proportion" of the EU's budget.

"Britain has been making a gesture, because over the past 10 years, even with the British rebate, we have been making a contribution into Europe two and half times that of France. Without the rebate, it would have been 15 times as much. That is our gesture," he said at 10 Downing Street.

Chirac and Schroder are deeply unpopular with their voters and so trying to survive by the usual tactic of focusing on an external enemy. Which is crazy- EU subsidies just damage the countries and industries that take them. Ireland was fatly subsidized for years & went nowhere. Then they adopted a raft of free-market Thatcherite reforms and their economy has never looked back. The big subsidy eaters need less, not more subsidies.

I think that Blair is still pro-EU, but knows that if he gives ground on this one, Brit taxes will have to rise. Which in turn means that the next Brit elections will likely be won by whichever party promises to pull the Brits out.

There's a shoot-out scheduled for next week, but looking at the plunge of the Euro, I'm guessing that the Brit rebate will be the least of their worries...