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EU Budget Talks Collapse at Acrimonious Summit

European Union headquarters in Brussels, Belgium

A two-day European Union summit in Brussels has collapsed in acrimony over the bloc's long-term budget, prompting EU leaders to say the union is now in deep crisis. The failure to agree on a budget follows the decisive rejection of the bloc's constitution by French and Dutch voters.

It was the last thing the European Union needed. The collapse of the budget negotiations threatens the bloc with financial paralysis on top of the political uncertainty it faces after the French and Dutch rejected the constitution.

Luxembourg Prime Minister Jean-Claude Juncker, who tried to strike a deal that would ensure the bloc's financing for the period between 2007 and 2013, was downcast as he announced the failure of his efforts after 15 hours of negotiations. He is heard here through an interpreter. "So Europe is not in a state of crisis. It is in a state of profound crisis," he said.

French President Jacques Chirac also used the word "crisis" to describe the state of the union after its failure to resolve the strident dispute over spending.

Mr. Chirac blamed Britain for the impasse, saying it was the British government's failure to surrender its annual rebate from EU coffers that led to the stalemate. German Chancellor Gerhard Schroeder also pointed the finger at Britain and the Netherlands, which demanded cuts in its contribution to the EU, as being responsible for the breakdown.

British Prime Minister Tony Blair, who had insisted that he would make concessions on the rebate only if the EU reforms its agricultural subsidy program, of which France is the main beneficiary, said Britain was not alone in rejecting the budget proposals. He said the Netherlands, Sweden, Finland and Spain also had problems with the compromise put forward by Mr. Juncker.

The Luxembourg leader says he was ashamed when several countries that joined the EU last year, and which are all poorer than the nations that rejected the proposed deal, offered to give up some of the funds that are due to them in a bid to rescue the budget deal.

Mr. Juncker indicated that the budget clash unmasked a deep gulf between countries like Britain, which want a lean market-oriented EU, and others that are striving for an ever closer union with social protection for its citizens. "It became clear that there were two ideas of Europe, two ideas of Europe which came up against each other and will continue to do so. There were those who just want a big European market, nothing else, a free trade area, and there were those who want a politically integrated Europe," he said.

The collapse of the budget talks came a day after EU leaders were forced to put the constitution into the deep freeze, extending the deadline for ratification into 2007 to avoid more humiliating referendum defeats after the French and Dutch fiascos. Experts say skepticism about further European integration is growing as is the gap between EU leaders and their people.