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Friday, February 26, 1999 Published at 08:31 GMT

Business: The Economy

Farm agreement stalls

Protesting farmers are expected to be present at the summit

EU agriculture ministers have failed to reach agreement on how to reform the Common Agricultural Policy (CAP), despite four days of talks that carried on through the night.

The plan was due to be put before an informal summit of EU heads of state who are meeting in Bonn to try and agree a general reform of the EU budget.

BBC News' Sarah Pennalls reports on what difference the reforms will make
The 15 EU countries have been negotiating since late 1997 on how best to pay for the EU in the next century.

Farming subsidies soak up half the EU budget, around $45bn (£30bn).

The agriculture ministers had been working on a compromise proposed by the German presidency after discussions stalled on disagreements between France and Germany. France receives the most money from the EU for its farmers, while Germany is the largest net contributor. During the negotiations the French accused the Germans of behaving like Margaret Thatcher 15 years ago, saying "I want my money back."

BBC News' David Eades: Summit 'a stepping stone'
Reforming the system of subsidies to farmers is a key priority for Britain.

France, under pressure from its farmers, is one of the main obstacles to cuts in CAP spending, but Britain says reform resulting in lower prices would be good for the EU's consumers, its taxpayers and for its farmers as well as making their industry globally competitive.

Farmers from around Europe are expected to converge on Friday's meeting in the German town of Konigswinter to protest against reforms they fear will slash their incomes.

Pressure on rebate

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UK Prime Minister Tony Blair is expected to come under intense pressure at the Bonn summit to make concessions on Britain's contribution to the EU.

Several countries want Britain to give ground on its annual £2bn rebate which it enjoys on its contribution to the budget.

France and Germany want it cut or scrapped but Mr Blair will insist that it is still "fully justified", according to his spokesman.

European Commissioner Sir Leon Brittan: Question is how far we should go
"Other countries know our argument that scrapping our rebate is no substitute for pushing through the radical reforms that are necessary.

"You're not going to address the unfairness that other countries suffer by creating another," the spokesman said.

Most governments agree on the need for reforms. But while some - Germany, Austria, Sweden and the Netherlands - are demanding cuts in their contributions, others - like Spain, Portugal, Ireland and Greece - are seeking to hold on to funding provided to help them strengthen their economies.

The president of the European Commission, Jacques Santer, has said he does not expect any decisions at Friday's meeting, but a failure to make the necessary reforms before the end of next month could lead to delays in admitting new countries from Eastern Europe.

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