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Friday, February 26, 1999 Published at 15:31 GMT

World: Europe

EU leaders clash over budget

Farmers in Bonn protested against planned cuts to the CAP

Leaders of the European Union are meeting for what is expected to be a stormy one-day summit in Bonn to try to reach a deal on the EU's financing.

Jon Sopel: "The German host would like a compromise"
The BBC's correspondent at the talks says Germany is determined to set a deal on the communal budget - worth about $100bn - by the end of next month. This would bring to an end 18 months of unsuccessful debate among the 15 EU countries on how the union should be funded in the next century.

Unless the EU reforms its finances, it will be unlikely to be able to fund the entry into the union of Cyprus, Malta and 10 East European countries in the years ahead.

[ image:  ]
Complicating the process is the unfinished business of the farm ministers' meeting in Brussels which broke down early on Friday morning with no agreement on reforming the Common Agricultural Policy, which consumes almost half of the EU budget of about $45bn.

The Bonn summit will give each country an opportunity to put its case, but several states are so divided on the issue, that there is no chance of an agreement on Friday, according to our correspondent.

David Eades: "The task is enormous"
The new German Chancellor Gerhard Schröder has staked his prestige upon brokering a deal, our correspondent says.

Divisive issue

The European Union's richer, northern countries - led by Germany - are seeking to freeze the budget and want to cut their contributions. Germany says it contributes 21bn Deutschmarks ($13 bn) more to the EU than it gets back.

[ image: Chancellor Schröder: Staked his credibility on a deal]
Chancellor Schröder: Staked his credibility on a deal
However, the less well-off countries, including Spain, Portugal, Ireland and Greece want increases in the EU's 35bn euro ($38.5bn) aid for poorer regions to make sure that they do not lose out when even poorer eastern Europeans nations join.

Ahead of the summit, Spanish Prime Minister Jose Maria Aznar warned that he planned to defend EU funding for his country.

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.

Blair defends rebate

Several countries want Britain to give ground on its annual £2bn rebate on its contribution to the EU budget, won by former Prime Minister Margaret Thatcher in 1984. France and Germany are among those wanting to see it cut or scrapped.

BBC Political Editor Robin Oakley: "This will be a meeting at which battle lines will be drawn"
Ahead of the official start of the summit, Mr Blair said that Britain had the rebate because it is a sizeable contributor to EU funds despite being poorer than many other member states.

"The justification for the British rebate is not simply that we got it and therefore we hold it.

"It is there to compensate us for for the fact that we are big net contributors to the EU and in order to make the system fair and equitable," Mr Blair said.

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