Interesting times

What a delicious irony. Just at a time when the "colleagues" are at their most anxious to present the "project" in its best light, up comes the EU budget.

Nothing is more certain to guarantee a constant diet of ill-natured squabbling right through the period when the most critical referendum campaigns are being run, showing up the EU for exactly what it is – a bunch of dysfunctional politicos all with their noses in the pork barrel.

Right in the middle of the fracas, of course, is the United Kingdom, with the "colleagues" casting covetous eyes on the British rebate, the sensitivity of which is such that it is also causing domestic strife.

So says The Daily Telegraph today, which reports that it is putting Blair and Brown at loggerheads (again).

We are told that a "new rift" has opened between Blair and Brown over how best to defend the rebate, worth £2.5 billion last year, centred around differences of opinion as to what the government strategy should be.

On the one hand, Blair and his inner circle are said to want to secure the best available deal as soon as possible, and get the inevitable row out of the way - ideally during the June European Council - while Brown is determined to fight tooth and nail all the way, if necessary beyond the referendum into late next year.

Blair's fear is that if the dispute drags on it could become a central issue in the run up to the referendum on the EU constitution, to which effect the Blair camp is prepared to consider a compromise, while the Treasury is adamant that a deal is not on the cards.

This spat is picked up by the Telegraph’s editorial, which ascribe the spat not to any differences in primciple but to the usual Brown-Blair disharmony, claiming that: "All Blair and Brown care about is bashing each other".

It is quite proper, says the Telegraph, that our EU budget rebate should be exercising the prime minister and chancellor, reminding us that the sums involved are substantial.

Last year, we paid £11.8 billion gross (£4.8 billion net after the £7 billion rebate) into EU coffers, a figure is equivalent to the entire Home Office budget. It would be enough to allow us to abolish inheritance tax and capital gains tax, and still have enough to scrap stamp duty.

Furthermore, the Telegraph adds, the system is painfully unfair: Britain has been a disproportionate contributor ever since it joined the EU:

Indeed, for most of the past 32 years, Britain and Germany have been the only two substantial net donors. Taxpayers have plenty of demands on their wallets without being asked to pay an even more inequitable tribute to a bureaucracy that then systematically loses it in mismanagement and fraud.

Nevertheless, despite the importance of the issue, the paper suspects that these are not the real reasons that Messrs Blair and Brown are worked up. Rather, they have seized on the issue as yet another club with which to belabour each other. No issue is too large to be dragged into the conflict between these two men, it says.

Thus, it is not that Brown is a Eurosceptic – the Telegraph argues that his record is impeccably Europhile. As a result, while there is an overwhelming case for an overhaul of the EU budget, aimed at approximating national contributions to GDP levels and reducing the awesome levels of graft and waste, that case will not be made because the two most powerful men in government are more interested in bludgeoning each other.

This is an intriguing thesis by the Telegraph but, as so often with the British media, absurdly parochial. As always, it seeks to bring community affairs down to the soap-opera level, expressing the issues in terms of domestic politics.

These two towering political figures (irony, just in case anyone missed it) may capture the headlines in the UK but, as we can see even from the previous post, the UK is by no means the only – or even the main – “actor” in this unfolding drama.

As well as Spain, fighting tooth and nail to preserve the largess to which it has become accustomed, Poland is making noises about its own share in the budget, Germany is still seeking a way out of increasing its own contributions and the Netherlands – which contributes the highest per capita payment to the EU budget – is distinctly unhappy and taking an assertive role in the negotiations.

Altogether, therefore, neither Brown nor Blair is in a position to dictate the agenda and, with so many conflicting issues unresolved, the only sure thing is that this dispute is going to run and run.

In this context, it is perhaps the Economist that offers a better analysis of the situation.

In this week's edition, it argues that the political reality is that no British government could give up the rebate, least of all when it has to win a tricky referendum. It sites a British official saying flatly: "no rebate, no constitution".

As to the problem of timing, it takes on board that very specific rebate issue and suggests that the other 24 member states may be pushing hardest early next year, just as the British referendum campaign is in full swing.

Whatever their own preoccupations, those member states will undoubtedly be sufficiently astute to realise that bad publicity on the rebate could well influence the vote and may agree to hold off the final negotiations.

In that case, the Economist ventures, one option might be to wait until after the British vote. That, it says, might make budget planning for 2007 chaotic in the extreme – but it would still be preferable to the chaos that could follow a British "no" vote.

On the other hand, Spain – and even Poland – might be sufficiently bloody-minder to use the threat of disruption during the British referendum as leverage against Blair, seeking to force him into an early agreement – possibly during the British presidency, which starts on 1 July. In that case, the Blair – Brown spat becomes relevant as Blair could find himself between a rock and a hard place.

Either way, we are in for interesting times.