BRITAIN is trying to turn the tables on President Chirac by drawing up plans to trade in its rebate from Brussels in return for guaranteed cuts in farm subsidies.

Tony Blair, who takes over the EU presidency in ten days, is confident that he can win enough allies to force the French President, his main adversary at last week’s Brussels summit, to accept fundamental reforms of Europe’s farming budget.

In a remarkable public intervention, however, Gerard Errera, the French Ambassador to Britain, went on ITN last night to argue that Mr Blair should use the presidency to unite Europe, not divide it.

“The job of the president is to bring people together, especially in times of crisis, not to impose views, especially when those views are not shared by the majority,” M Errera said in an interview that would have been approved by Paris.

Under the British plan the Government would agree to scale back its £3 billion-a-year rebate in return for a fundamental review of EU spending in 2008, leading two years later to substantial cuts in the annual €50 billion (£34 billion) Common Agricultural Policy.

The European Commission would be mandated by Britain to draw up reform proposals that would take effect before the end of the next seven-year budget in 2013.

The Government believes that José Manuel Barroso, the Commission president, and other key commissioners are generally supportive of the British campaign to refocus EU spending from agriculture to modern competitive industries and research and development.

Britain engineered Senhor Barroso’s appointment last year after objecting to the French nominee, Guy Verhofstadt, the Belgian Prime Minister Ollie Rehn, the enlargement commissioner, Benita Ferrero-Waldner, the Foreign Affairs Commissioner, Peter Mandelson, the Trade Commissioner, Franco Frattini, the Justice Commissioner, and Dalia Grybauskaite, the Budget Commissioner, who would be responsible for drawing up the reforms, are also believed to be sympathetic. Britain is further calculating that Angela Merkel will replace Gerhard Schröder as Chancellor of Germany in September’s general election, and she is in favour of cutting agricultural subsidies.

Britain is also expected to begin a diplomatic offensive to convince the new member states of Eastern Europe that they would gain more from an overhaul of EU spending than they would have done from Britain surrendering its rebate at last week’s Brussels summit.

Other smaller countries such as the Netherlands, Sweden and Finland are also in favour of curbing the CAP.

Mr Blair hopes that once he has opened up the debate on CAP reform, more countries will come round to his view.

A final British calculation is that M Chirac is likely to be president only until 2007, and might be more willing to give ground on agricultural spending if the cuts kicked in after he left office. The British plan would mean “everything is on the table, and countries are no longer bound by the 2013 agreement”, one government source said.

M Chirac and Herr Schröder insisted last week that agriculture spending had been fixed until 2013 by an agreement in 2002. An alternative would be to make countries responsible for their own farm spending. That would let France carry on subsidising its small farmers in Provence, while Britain could scrap subsidies.

Mr Blair disclosed in the Commons yesterday that he had proposed a similar deal during the latter stages of last week’s summit. He had suggested a review reporting in time for the EU to be able “midway through the next financial period” to make radical changes to the budget.

But the Luxembourg presidency’s compromise plan had fallen far short of that. It would have meant endorsing the 2002 CAP package right up to 2013. It would have cost the UK £18 billion and the money would have gone not to poorer countries but wealthier ones.

CAP, which accounts for 40 per cent of all EU spending, was designed by France after the Second World War to help French farmers. Britain rejected last-minute proposals for a mid-term review in 2010 because the wording was so vague that it would not guarantee a substantial cut in farm spending, and because the cuts would come in only after 2013.

The Prime Minister admitted to MPs for the first time yesterday that when the spending row is finally settled Britain could well end up with a higher contribution because the wealthier countries will be paying more than poorer ones.

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