Spain to Accept EU Cuts over next 7 years

Spain will accept EU cuts if UK rebate pared

Spain is prepared to accept big cuts in the sum of money it receives from the European Union over the next seven years if the UK also accepts a much smaller rebate from the 2007-2013 EU budget, said Alberto Navarro, Spain's secretary of state for the European Union.

Spain's more conciliatory stance, signalled by Mr Navarro in an interview , is expected to add further pressure on the UK to make concessions ahead of next week's summit in Luxembourg, where the EU's 25 member states are supposed to complete negotiations on the 2007-2013 budget.

But Tony Blair on Friday signalled that Britain would only accept significant changes on its rebate as part of a broad review of the EU budget.
?If we have a fundamental review of the way Europe spends its money then everything is open to debate,? he said after talks with a delegation of MEPs.

Mr Blair signalled reform of the Common Agricultural Policy (CAP) would have to form part of any deal, though any major changes to the complex system of farm subsidies is unlikely in the short term.
?If people want to look again fundamentally at the CAP of course everything can be looked at properly,? he said.
Spain believes a deal on the budget next week would go a long way to dispel the pessimism that has engulfed European leaders following French and Dutch referendums last week that rejected a new constitution for Europe. Nevertheless, Mr Navarro said clinching a deal by next week ?would not be easy?.

Spain accepts that it is far too wealthy to continue to qualify for EU development aid, Mr Navarro said. Madrid has received a net ?93bn ($109bn) in EU funds since joining the union in 1986, a cash injection that surpassed US aid to Europe under the Marshall Plan after the second world war. EU funds have helped transform a once backward country into one of the eurozone's fastest growing economies, with modern highways and high-speed rail networks.
Since 1992 Spain has received a quarter of the EU budget. But from 2007 Madrid could lose up to 90 per cent of its funding as money is diverted to help the EU's new east European members. Spain would become a net contributor to the EU budget by 2012.

Spain's main demand in the current budget negotiations is for a longer transition period to cushion the blow of the loss of EU funds. The Luxembourg presidency is offering a two-year phase-out, whereas Spain would prefer a five-year transitional period.
?Spain should not pay for the full cost of enlargement while other countries get enlargement for free,? Mr Navarro said. ?Financing enlargement should not be a question of taking money from Spain and giving it to the new member states.? Mr Navarro said just as Spain recognises that it has outgrown EU aid, the UK should admit that the conditions that justified the UK rebate, which will total ?5.1bn ($6.2bn, £3.4bn) this year, no longer hold.

?When Margaret Thatcher won the UK rebate in 1984, most EU funds were spent on farming and the UK was much poorer than it is today,? Mr Navarro said. ?But the UK is now the third most prosperous country in the EU, farm spending consumes a smaller proportion of EU funds, and the UK has become more efficient at receiving more from the Common Agricultural Policy.
?If the UK does not give ground, poor member states will be financing the UK rebate, and that is unfair,? Mr Navarro said. ?It might be difficult to abolish the rebate but the UK must accept a formula that would reduce it over time.