France says price of farm reforms is Britain's £2bn rebate

Britain's £2BN annual budget rebate from EU coffers is under attack, with France saying it will only agree to curb farm spending if the UK's cash refund from Brussels is on the table too.

Under pressure to agree changes to the costly Common Agricultural Policy – from which France benefits greatly – France's new premier, Jean-Pierre Raffarin, gave a clear warning that Paris will not concede unless other countries take a financial hit as well.

Germany, the EU's biggest paymaster, and the UK are anxious to get a deal to cut farm subsidies before the EU accepts as many as 10 new countries probably in 2004.

But Mr Raffarin said "The British are very attached to their [rebate] cheque, one can understand that. The Spanish are very attached to their structural funds, one can understand that."

He added: "What seems important for us is that all the major European dossiers are handled simultaneously."

The comments, described by one EU official as "classic French politicking", are probably designed to help stall changes to the CAP which costs about €40bn a year – almost half of the entire EU budget.

The European Commission has proposed a series of changes to the CAP which could be agreed next year – before the EU accepts new member states including Poland which has a large farming sector.

France wants to delay discussions on any significant changes to the EU's farm policy until after enlargement, because it believes new incoming nations like Poland will be its allies in the battle to maintain the CAP.

Meanwhile the British budget rebate is guaranteed during the current period of EU spending, agreed by EU leaders, which expires in 2006.

If the issues of CAP reform and the British rebate are linked there is little prospect of any serious deal before 2006.