Leading article: A fudge is better than nothing

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The Prime Minister is practised at dressing up pragmatic compromise in the garb of principle. But not even he could quite finesse the hugely complex product of 25-sided haggling yesterday as a coherent European Union budget for the future. Once upon a time he said that he would not give up the British rebate negotiated by Margaret Thatcher in 1984. Then he said he would not give it up until the French gave up the farm subsidies that made it necessary. In the end, though, he gave up part of it in return for nothing more substantial than agreement to "review" the subsidy regime in two years' time - a review over the outcome of which the French would have the right of veto.

As it happens, the agreement that was reached in Brussels was a perfectly sensible compromise, every element of which Tony Blair can and does justify. It would have been manifestly unfair to ask the 10 new member countries, all of them poorer than Britain, to contribute to the British rebate - even though by the terms of their accession they had implicitly agreed to do so. Despite that concession, the British rebate will continue to grow in value and can be said to have been preserved. Important, if woefully inadequate, reforms of the Common Agricultural Policy (CAP) were agreed three years ago and there was no prospect of securing the necessary unanimous support for further reforms before 2008. The alternative to the deal agreed in the middle of the night on Friday was, therefore, no deal rather than the ideal. And no deal, as Mr Blair rightly says, would have been bad for Britain, alienating the new EU members and offending the new Chancellor of Germany. Indeed, Angela Merkel's emergence as an independent honest broker rather than half of a Franco-German stitch-up may have been the most significant outcome of last week's summit.

What Mr Blair did not say, because it might have been undiplomatic, was that failure to agree a deal would have fatally disabled the next push for CAP reform. Jacques Chirac can no longer deflect awkward questions about why French farmers should be subsidised to keep Africans poor by claiming that the British are being intransigent about the rebate. Without last week's deal, the rebate would have become difficult to defend, as Cyprus became a bigger net contributor per head to the EU than Britain.

As it is, France is now in danger of becoming isolated as the defender of the most indefensible feature of EU financing, namely the snail-like pace with which it is prepared to abandon the subsidies that distort world trade and oppress the world's poor. That - along with Mrs Merkel's detachment from the Franco-German alliance that has for too long dominated the EU - offers hope for the future. Mr Blair has just managed to keep the show on the road during the British presidency, although the trial of Orhan Pamuk casts a shadow over the start of Turkey's accession negotiations. Mr Blair will not see real reform in his time. He may have to settle for being one of those who helped to make it possible.

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