TONY BLAIR’S bitterly fought compromise over the EU budget lay in tatters yesterday after France and Ireland immediately threatened to veto any changes to farm subsidies.

President Chirac of France and Bertie Ahern, the Irish Prime Minister, both emerged triumphantly from the budget negotiations, insisting that the EU’s agricultural spending has been secured until 2014, the start of the next budget period.

France is the biggest overall recipient of farm subsidies, getting about £6 billion a year, while Ireland is the biggest recipient per capita.

Their insistence that the Common Agricultural Policy (CAP) has been kept intact is a huge embarrassment for Mr Blair, who justified surrendering £7 billion of the British rebate by saying that he had secured a “wide-ranging” review of EU finances in 2008-9.

He had always insisted that he would only accept cuts in the rebate in return for cuts in farm spending, and said after the summit that the review opened the way to curbing the EU’s £198 billion agricultural budget.

However, M Chirac and Mr Ahern pointed out that, despite the review, the level of farm subsidies would stay at the current levels until 2014, because the subsidies could be cut only with the unanimous agreement of all countries.

Philippe Douste-Blazy, the French Foreign Minister, said: “Jacques Chirac has secured that there won’t be reform to the Common Agricultural Policy before 2014.”

Paris made it clear that there was no change to its policy and it would veto any attempt to reopen a deal made in 2002 to keep farm subsidies at current levels until 2014.

A French official said: “We are safeguarded. We will not accept any change — we go on with our position that CAP has been set until 2013 inclusive.” Asked how the French Government would respond to a review in 2009 that demanded a cut in farm spending, he said: “We would veto it.”

After the deal was struck, Mr Ahern told Irish journalists: “It was important for us that any deal that we reached would last for the full term until 2013 and would not be reopened. Of course we are also building in a review mechanism, but only on condition that the review outcome need not take place until 2013, and that’s been agreed.” He added: “I think the IFA (Irish Farmers Association) and farmers generally have to be very happy on all accounts — we have the rural development and the CAP issue intact.” Challenged whether he was sure farm spending would remain unchanged, he said: “Yes.”

M Chirac returned to Paris with his reputation considerably enhanced for what was widely hailed in the French media as a victory over his longstanding rival, Mr Blair.

French newspapers poured scorn yesterday on Mr Blair’s failure to secure cuts in farm subsidies. Le Dimanche said that farm subsidies “will not fall between now and 2013, despite the wishes of Tony Blair”.

The Sunday edition of Le Parisien declared that M Chirac “won the match against Tony Blair on the British rebate without yielding on the Common Agriculture Policy”.

A British official insisted the budget review was meaningful, declaring: “There is nothing in the document that rules out reform before 2013. The fact remains that it is impossible to predict what position countries will take in 2009 — in several countries, including France, there will be elections before then. There will probably be a new leader in France.”

Under the deal, Britain has accepted permanent changes to its rebate, meaning that it will no longer apply to non-farm spending in any country that joined the EU after 2004, includng the new Eastern European members.

The new budget means that Britain’s net contributions to the EU rise by about two thirds to £6 billion a year — about £100 per British citizen — while the contributions for France and Italy both more than double, but from a lower base. Mr Blair insisted that for the first time since Britain joined the EU it will be paying roughly similar amounts to France and Italy, both countries of similar size and wealth.

Mr Blair was widely praised around Europe for taking a hit on the rebate, which was won by Margaret Thatcher in 1984, but which many insist was no longer justified.

Costas Karamanlis, the Greek Prime Minister, said: “The British presidency deserves praise for its constructive role in a complicated negotiation and for the courage it showed in giving up part of its rebate.”

BALANCING THE BOOKS

THE VIEW FROM EUROPE

FRANCE

‘Everyone realised it took a lot of courage from Mr Blair . . . This negotiation shows that Franco-German co-operation was constant at all times and perfect’
President Chirac

‘European rebound’
Le Monde

GERMANY

‘The big cloud has been lifted from Europe. This deal is in the European interest’
Angela Merkel, the German Chancellor

‘The German wallet saved the EU budget’
Svenska Dagbladet online

POLAND

‘I consider myself a young man and I feel young now and all I can say to this is yes, yes, yes!’
Kazimierz Marcinkiewicz, Polish Prime Minister

SPAIN

‘A good result for Europe and certainly Spain’
Pedro Solbes, Spanish Economy Minister

‘Europe is moving again and can look to the future with greater hope’
Miguel Angel Moratinos, Spanish Foreign Minister

EU

‘It was a great result for the British presidency. . . What would be the signal to public opinion if we can’t agree on a budget?’
José Manuel Barroso, European Commission President

‘The EU’s crisis has not yet been overcome with this summit . . . One could say that we find ourselves at a pause for thought’
Guenter Verheugen, EU Industry Commissioner, in Bild am Sonntag newspaper