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European Union Considers Financial Issues

RENEE MONTAGNE, host:

European Union leaders are gathering in Brussels. The two-day summit will attempt to resolve differences over the organization's budget as well as problems dealing with ratification of its common constitution. The meeting comes two weeks after France and the Netherlands voted down the constitution. Now the leaders will attempt to restore a sense of credibility to the 25-nation bloc and try to avoid further divisions over money. NPR's Sylvia Poggioli is in Brussels and she joins me now.

Sylvia, the French and Dutch voters dealt a pretty serious blow to plans for a more integrated Europe. So why are the leaders focusing on the budget now instead of dealing with that particular crisis head-on?

SYLVIA POGGIOLI reporting:

Well, many European analysts believe it was done on purpose. You know, the political elites here were taken completely by surprise by the French and Dutch rejections and they don't know what to do. They can't even agree on whether the constitution is dead or not. They seem to agree on only one thing and that's not to do anything is probably the best strategy, but that doesn't mean that discussing the budget will be easy and a deadlock is looming there.

MONTAGNE: And what's at stake in these negotiations over the budget and how hot is the fighting?

POGGIOLI: Well, it's shaping up as a French-British showdown, which has been the traditional division within the EU since it was created. Forty percent of the EU budget goes into farm subsidies, and France gets the lion's share. Britain, on the other hand, has, since 1984, enjoyed a budget rebate because fewer Britons work on the land, and it now reaches more than $6 billion a year. But Britain is now one of the wealthiest members, and it's been asked by the other EU countries to cut back its rebate, a portion of which is paid for by the new poorer EU members from Eastern Europe.

British Prime Minister Tony Blair says he'll consider a rebate cutback only if the entire farm subsidies' policy is revised and France has adamantly refused. So they're back at square one. If an agreement is not reached, this will add budgetary turmoil to the crisis of Europe's political direction.

MONTAGNE: Well, beyond this, then, is there any serious discussion at the moment within Europe about what to do now?

POGGIOLI: Well, while the political elite seem to be floundering, editorial pages are filled with analysts' suggestions and proposals on how to restart the European project. Most observers agree that the most serious problem is the disconnect between politicians and citizens, what's called the democratic deficit, and they point to the failure of leaders to inspire people to create something like a European dream and to provide concrete assurances of prosperity and just plain jobs. Growth is basically at a standstill in Europe and unemployment is rising. It's an average of nearly 9 percent. There's a great deal of anxiety and uncertainty about the future, especially among the young.

The French and Dutch no votes were motivated in great part by fear of immigration from the new states to the east and from Muslim Turkey, which is a candidate for membership. So there's widespread agreement that open-ended expansion is over and analysts say the first thing the EU leaders must do is get their citizens on board for whatever new European project they might devise.

MONTAGNE: Sylvia, are there any winners in this EU disarray?

POGGIOLI: Well, many British commentators welcome the constitutional rejection as vindication of the British model of the EU as a loose trade bloc rather than a strong political institution, and certainly Germany and France, which had seen themselves as the locomotive of the European Project, have been weakened. Some European commentators say the US could reap the benefit of a weaker, more divided Europe, but it's also true that the likely halt to expansion will dash US hopes that the EU would admit not only Turkey and the former Yugoslavia states but also Ukraine and Georgia, countries that are generally friendly to the United States. And rejection of the constitution signals a broader European mood of creeping nationalism and anti-globalism, which is often identified with anti-Americanism. So in the near future, even though it's weakened, the EU is not likely to be more submissive to the United States.

MONTAGNE: Thanks very much, NPR's Sylvia Poggioli at the EU summit in Brussels.

This is MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.

Sylvia Poggioli is senior European correspondent for NPR's International Desk covering political, economic, and cultural news in Italy, the Vatican, Western Europe, and the Balkans. Poggioli's on-air reporting and analysis have encompassed the fall of communism in Eastern Europe, the turbulent civil war in the former Yugoslavia, and how immigration has transformed European societies.