PositionTony Blair

The UK Foreign Secretary Jack Straw warned his colleagues last week that the Presidency's compromise proposal on the 2007-13 financing would contain "significant changes" compared to the Luxembourg Presidency's package. He lived up to his word. Instead of the euro 871 billion proposed in June, the UK has driven the figure down to 846 billion. New member states are being asked to swallow a 14 billion cut in their allocation of regional development aid. In return, the UK is offering to put euro 8 billion from its rebate on the table.

The reactions from national capitals have been predictable. The UK's proposals are "self-serving", the overall package is "unacceptable", while Tony Blair must give up more of the rebate. Several have expressed scepticism that this proposal stands any chance of forming the basis of a deal next week.

But leaving aside the declarations of disappointment, one should not be blind to some aspects of this package which give cause for optimism about chances of agreement.

First, it was clear that the UK, a leading budget disciplinarian, would try and force the overall limit down below the Luxemburgers' figure of 1.06%. To squeeze the budget they propose taking euro 14 billion from the new member states. But their tactic...

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