GERHARD SCHRÖDER, the German Chancellor, calls it national selfishness. President Chirac of France demands that Britain give it up as an act of European solidarity.

The £3 billion British rebate from the EU, or cheque Britannique, is not just a convenient distraction from the French inspired constitutional crisis. It is a perpetual sore in Britain’s relationship with Europe. Most of the 24 other member states contribute to it. All want to abolish it. Britain retains a veto.

Many EU countries believe that the rebate graduated from being merely unjustified to morally indefensible when several poor Eastern European countries joined the EU last year. Lithuania, Slovakia and Poland have a fraction of Britain’s wealth, but help to finance it every year. Although Britain championed enlargement, the rebate means that Britain is paying only a small share of its costs.

The rebate is absurd, but it is no more so than the EU budget. In the topsy-turvy world of EU finances, it takes an absurdity to rectify the absurdity of the Common Agricultural Policy (CAP).

The battle for the rebate began in 1979 after Mrs Thatcher came to power. The Government’s case was simple. The UK was the third-poorest member of the nine-strong European Community, yet its net financial contribution was 40 per cent more than Germany’s.

Mrs Thatcher started demanding “I want my money back” in 1979. At the 1984 Fontainebleau summit she won a refund of two thirds of Britain’s net contribution, the difference between what it pays in and gets back in subsidies. That formula has saved Britain a total of £52 billion.

Today Britain is one of the richest EU member states, but the original imbalances in the EU budget remain.

The CAP, which accounts for nearly half the EU budget, funnels taxpayers’ money from across the continent to French farmers. In 2003 France received more than €10 billion (£6.7 billion) from the scheme, and Spain and Germany €6 billion, while Britain recieved only €4 billion. At €68 per citizen per year, Britain receives less from the CAP than any other EU country.

Just as poor Eastern European countries are subsidising the British rebate, they also help to finance the subsidies given to French farmers. British officials call that a moral outrage.

The EU’s second biggest item of expenditure is structural funds, or development money for poor regions. Almost the entire budget is mopped up by Spain, Italy, Portugal and Germany. Again Britain lags far behind, receiving less even than Greece, which has a sixth the British population.

Overall Britain gets less money per person from EU policies than any other country. Without the rebate it would be the biggest single net contributor.Were it not for the British rebate France would pay no money into the EU, despite being one of the richest countries.

Even after the rebate, Britain still paid two and a half times more between 1995 and 2002 than France or Italy, which have similar population and wealth. Without the rebate Britain would have paid 14 times more than France and 10 times more than Italy.

CAP reforms mean that it no longer subsidises farmers for producing food, and now pays them just for owning land. The reforms merely entrenched the imbalance in France’s favour. In 2001 M Chirac and Herr Schröder agreed privately to fix CAP subsidies at current levels until 2013, then informed an irate Tony Blair of the decision.

Britain insists that as long as the absurdity of CAP funnelling EU taxpayers’ money to French landowners remains, the rebate remains justified.

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