William of Normandy and Harold Godwinson failed to reach an agreement today no that’s not it. Perhaps, the Duke of Wellington and Emperor Napoleon couldn’t resolve differences in Brussels. Nope, that’s not it either. Here we go. British Prime Minister Tony Blair and French President, Jacques Chirac remain at odds over EU budgetary problems.
Back during Prime Minister Margaret Thatcher’s administration, the “Iron Lady” worked out an arrangement in which the U.K. would get essentially get a tax return or rebate for some of the monies they contribute to the E.U. every year. Right now, Chirac would like to see that rebate eliminated. Blair, playing hardball says he won’t budge until farm subsidies are done a way with as well. The subsidies offer great benefits to France. Others have entered their opinion in the fray but these two appear to be the most vocal in the matter.
This is just latest problem for the troubled European Union, which has all the problems of a big nation outside its borders and all the disputes of the confederation it is. France and Holland both recently failed to ratify the E.U. constitution, which created real problems going into the conference. Then some Italian political leaders started calling for resumption of the old lira currency in lieu of the euro they use now. The E.U. also has trade rifts with China over the textile issues, much like the U.S. and they’re lodged complaints at the WTO over U.S. and Boeing after the U.S. registered complaints over the E.U. and Airbus.
Chirac offered a “compromise” freezing the rebate for just the next budget cycle of 2007-2013 but Britain promptly said “no”. A Chirac aide told reporters, “A freeze is not enough, but if it is a compromise, like all compromises, we’ll have to accept that it doesn’t make everyone happy.”
Many of these problems stem from other nations coming into the Union. A number of countries will be coming into the E.U. in the coming years that will alter some of the economic balance and Chirac was seeking to protect his farmers. Other nations are also seeking reductions in their contributions to the E. U.
With confidence in the euro teetering based on indecision and lack of compromise from E.U. leaders, currency traders watch intently.
John Stith is a staff writer for Murdok covering technology and business.
