Face-to-face with his critics, Blair wins approval with call for reform

Tony Blair demanded a fundamental rethink of EU spending priorities as he staged a vintage political counter-attack, warning his European critics to heed a "wake-up" call from discontented voters.

Widely blamed for the fiasco of the Brussels summit last week, Mr Blair escaped unscathed from a debate in the European Parliament, insisting that "only by change will Europe recover its strength, its relevance, its idealism and its support amongst people".

However, the carefully crafted speech raised high expectations of reform under the British presidency of the EU - which starts on 1 July - while offering no new proposals or clues on how to resolve the impasse over European spending.

On Wednesday MEPs applauded the Prime Minister of Luxembourg, Jean-Claude Juncker, who made a scathing attack on Mr Blair for blocking a deal on the EU budget for 2007-13.

But yesterday most Euro-MPs seemed won over by a speech in which Mr Blair described himself as a "passionate pro-European" while making a powerful plea for reform to deal with the forces of globalisation.

Deploying attack as the best form of defence, the intervention proved a tactical victory for Mr Blair who, just a week ago, found himself almost isolated in his defence of the British budget rebate.

The Prime Minister argued that it would be difficult to win a referendum in any EU country, adding: "It is time to give ourselves a reality check. To receive a wake-up call. The people are blowing the trumpets round the city walls. Are we listening?"

The referendums in France and the Netherlands "became merely the vehicle for the people to register a wider and deeper discontent with the state of affairs in Europe".

But there was no indication of how the often-contradictory motivations of Dutch and French voters could be satisfied, or how five-year-old moves to revive the economy could be reinvigorated.

When Britain's six-month EU presidency starts next week, Mr Blair assumes the responsibility for brokering a deal on the EU budget, but yesterday he stuck to his demand that the proportion of the EU budget devoted to spending on agriculture must be cut from the proposed figure of around 40 per cent.

The British budget rebate, worth €4.6bn (£3bn) annually, could be negotiated but only on one key condition. Mr Blair said he could not agree to plans unless they "at least set out a process that leads to a more rational budget; and that this must allow such a budget to shape the second half of that [financial] perspective up to 2013.

"Otherwise it will be 2014 before any fundamental change is agreed, let alone implemented."

The European Commission has already suggested a review of spending should take place in 2008, though it does not make clear if it should be free to reopen a deal on agriculture spending up to 2013, agreed in 2002. That is because such a deal is almost certain to be blocked by the French President, Jacques Chirac. Paris, the biggest recipient of EU farm subsidies, says it has already made a series of concessions over agriculture. Yesterday the French Foreign Minister, Philippe Douste-Blazy made it clear France is in no mood to reopen the 2002 deal, which Mr Blair signed up to and endorsed in December 2003. "This was a commitment and Europe has been built by respecting commitments," M. Douste-Blazy said.

Nevertheless, few MEPs spoke against Mr Blair's idea of more spending on research and development rather than the CAP. Several, including the veteran firebrand, Daniel Cohn-Bendit, highlighted Britain's decision to block one CAP reform under which subsidies to individuals would have been capped at €300,000. That decision was taken as most of the receipts going to Britain are directed towards large landowners.

More worrying for Mr Blair was the cool reaction in new member states. Bronislaw Geremek, a former foreign minister of Poland, said: "I was disappointed we did not hear what was next for the constitutional treaty, how he is going to organise the debate about Europe, what next for the budget. There were no words for the new member states who are paying the highest price for the lack of the budget compromise."

The words that warmed European hearts

NEED FOR CHANGE

"Only by change will Europe recover its strength, its relevance, its idealism and its support amongst people"

NEED FOR REALISM

"It is time to give ourselves a reality check. To receive a wake-up call. The people are blowing the trumpets round the city walls. Are we listening?"

THOSE REFERENDUMS

The referendums in France and the Netherlands "became merely the vehicle for the people to register a wider and deeper discontent with the state of affairs in Europe"

'RATIONAL' BUDGETS

Mr Blair said he could not agree to plans unless they "at least set out a process that leads to a more rational budget; and that this must allow such a budget to shape the second half of that [financial] perspective up to 2013. Otherwise it will be 2014 before any fundamental change is agreed, let alone implemented."