EU treaty shelved

Friday, 17 June 2005 12:00 AM

EU leaders have decided to shelve the EU Constitution, but there is no sign of an agreement over the EU's budget.

Last night Jean-Claude Juncker, the current EU president, said the November 2006 deadline for ratification would be suspended to allow time for reflection on the French and Dutch 'no' votes.

Following the announcement, Denmark, Ireland and the Czech Republic said they would be postponing their referendums.

Today will see tough negotiations on the EU's budget - with the issue of the British rebate still central.

Prime Minister Tony Blair has repeatedly said that he will not accept any renegotiation of the rebate unless there was a fundamental review of the Common Agricultural Policy.

Even with the £3 billion a year rebate, Britain is the second largest net contributor to the EU.

But French president Jacques Chirac - whose farmers are the main beneficiaries of the CAP - is refusing to discuss CAP reform.

A number of states are sympathetic to the UK's calls for CAP reform, but none currently support the rebate.

But the waters could be shifting with German opposition leader Angela Merkel, who is heavily tipped to win the forthcoming German election, saying that asking the UK to give up its rebate before CAP reform was unreasonable.

The Dutch and Swedish are also supporting the UK's call for the overall EU budget to be reduced, saying they are not prepared to sign up to the budget in its current form.

The UK is due to take over the EU presidency of July 1.

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