The European Union is ghastly. It poisons all it touches. Europe sabotaged Margaret Thatcher’s last government. Europe mugged John Major to death. Now Europe has driven Tony Blair to make a complete ass of himself in Brussels. This protectionist cartel is internally corrupt and externally a menace to global trade and peace. Britain’s leaders are humiliated whenever they try to reform it.

So far, so miserable. The deal that Blair struck yesterday morning with his European partners is impossible to defend. Such a way of disposing of the future governance of an entire continent is inexcusable. Overtired and overfed politicians negotiate stupendous sums of other people’s money into the night, finally agreeing to any nonsense so as to get home for Christmas. It is like some medieval field of the cloth of gold. Amid much posturing and jousting, peace is declared and the parties go home to prepare for war.

Blair’s policy on the European budget was sound. He championed the expansion of the EU into eastern Europe. He acknowledged that the new states would need subsidy to convert from primitive socialism to turbo-capitalism.

This subsidy could come only from the West’s gigantic farm budget. Since this would lose money to the French, Britain would ease the path by agreeing to scale down its 1984 budget rebate. This had been incurred to compensate Britain for the EU’s redistribution being so heavily skewed in favour of farming, which is only a small part of the British economy.

Britain accordingly proposed that the EU budget be frozen and “fundamentally reformed”. States should pay into it what they could afford, not what was stipulated in some long-past deal. The common agricultural policy (CAP) should be altered so that farm support drastically declines. In return Britain would sacrifice its rebate. The package was neat and tidy, financially and politically.

From the start Blair was hoist with his own petard. Back in 2002 he had persuaded Jacques Chirac not to veto the accession treaties of the new eastern states for fear of what they might do to farm support. Blair meekly agreed that expansion should in no way damage French interests. He signed the 2002 CAP reform to last until 2013. This promised farmers continued EU subsidy to roughly 40% of the total budget.

Blair personally agreed this lunacy. He signed it. It was his Munich. Like Neville Chamberlain he thought he could somehow bluff his way through the short term and leave the long term to worry for itself. At least this time the Czechs and Poles were beneficiaries of his appeasement.

As Blair’s “legacy moment” approached this autumn the 2002 deal came to haunt him. He hoped that he could put moral pressure on the French by getting his new friends in the east to gang up on Chirac. A plan to rescind 2002 might be lubricated with the proceeds of Britain’s rebate. It was at least bold.

Had Blair hit the ground running when he took over the presidency last July, he might perhaps have isolated Chirac. The moment was opportune. The new EU constitution, designed by France to entrench a Holy Roman Empire of Franco-German bureaucracy, was in ruins. The eastern hordes were pouring into Brussels to rape and pillage western Europe’s taxpayers. The Scandinavians were hungry for leadership. Germany was in disarray.

If this was an opportunity, Blair let it pass. He failed to capitalise on the French and Dutch referendums and expended political capital in Europe by further cosying up to George Bush. Chirac may be a tiresome bore but he is no fool. France’s relations with Europe have long been disastrous militarily but never diplomatically.

Europe is always the theatre in which French interest is the star. Blair’s belief that Chirac would somehow tear up a farm agreement intended to last to 2013 was recklessly naive. That Chirac would do so to help glorify a British presidency was even more so.

Blair nonetheless had one shot in his locker — the rebate. Its “indefensibility” neatly mirrored that of the French farm subvention. Under it Britain would by 2013 be the lowest net contributor to the EU budget other than Cyprus. This was absurd.

Yet to a prime minister set on reform the rebate was a negotiating tool beyond price. Protected by veto, it was not just a stick but a magic sword, a lever, a wedge and a bribe, all in one.