British Prime Minister Tony Blair, acknowledging that London's rebate from EU coffers is an anomaly that "has to go", said yesterday he believed he could get a deal on the European Union Budget in the next six months.
The head of the executive European Commission and Italy's Prime Minister played down the turmoil unleashed by last week's failure to agree on a long-term budget and voiced optimism a deal could be reached under Britain's EU presidency from July 1.
But the Netherlands, which joined Britain in blocking a deal on the long-term budget at an acrimonious summit last week, voiced scepticism about any early settlement, saying there was too much bad blood among EU leaders.
And French Prime Minister Dominique de Villepin raised the temperature further by reaffirming France's refusal to bargain away EU farm subsidies in return for a reduction in the British refund, the issue on which the budget negotiations foundered.
Mr Blair takes over the chair from Luxembourg amid a double crisis over the failure to agree on the 2007-13 budget and the rejection of the EU Constitution by French and Dutch voters.
"We are prepared... to recognise that the rebate is an anomaly that has to go, but it has to be in the context of the other anomaly being changed as well," he told reporters in a striking change of tone.
It was the clearest indication so far that he is willing to bargain away the annual refund won by Margaret Thatcher in 1984 provided France relents on an eventual reform of farm subsidies.
At the ill-tempered Brussels summit, President Jacques Chirac rejected any linkage between the British rebate and reforming the Common Agricultural Policy before 2013.
Poland, the biggest of the poor east European newcomers that stand to lose most from a budget delay, announced an initiative to try to salvage a deal, saying it would use a meeting with the French, German and British foreign ministers on June 27 to press for an early deal.
The summit sharpened an ideological divide within the EU between free-marketeering economic liberals led by Britain and advocates of a European model of social and rural protection led by France and Germany.
German Chancellor Gerhard Schroeder, facing a likely general election defeat in September, said in Berlin that Europe faced a choice over its future direction:
"Do we want a united Europe that's capable of action, a really political Union as the Constitution foresees? Or do we just want to be a big free-trade zone, do we want to go back from the European Union to the European Economic Community?"