EU hopefuls fear membership delay

Europe: Deadlock over finances at Vienna summit dismays Eastern European states as fishing faces new restrictions

LEADERS OF former communist states in Eastern Europe applying to join the EU are expressing dismay that the deadlock over Europe's future finances may delay their membership.

After last week's European Union summit in Vienna proved unable to agree anything more than a timetable for resolving the financing impasse, applicant countries voiced disappointment over the lack of progress.

Their fears were heightened by comments from Germany's Social Democrat Chancellor, Gerhard Schroder, that agreement on a EU reform package cutting Germany's financial contributions was a precondition of Europe's enlargement .

However, a consensus seemed far away after a north-south split emerged at the meeting, with Spain preventing any mention in the summit conclusions of a plan favoured by Germany, France and Britain, to freeze the EU's budget.

Jerzy Buzek, the Prime Minister of Poland, one of the hopeful applicants, warned that "potential failures or delays in this domain could have a negative influence on the process of enlargement".

Despite repeated commitments from European leaders to the principle of expanding the EU eastwards, heads of the 15 member states failed to agree on a timetable. Formal accession negotiations have already started with the Czech Republic, Estonia, Hungary, Poland, Slovenia and Cyprus. Altogether, 11 countries in all hope to join in the next decade.

With no sign of consensus on EU future funding, leaders are considering holding an extra summit in February to provide a final opportunity to explore compromise positions ahead of a crunch meeting in March.

In Vienna the leaders agreed to a March deadline to reach a decision on the reform package, called Agenda 2000.

Germany, which is by far the EU's biggest paymaster, is demanding a cut in its annual pounds 8bn net contributions. In the run-up to the summit the Germans took an increasingly strident tone, as Mr Schroder insisted Europe's problems could not be solved by reaching for a German cheque book.

Germany, France and Britain have supported moves to freeze the budget at current levels plus inflation for 2000-2006. The move is opposed by Spain, Portugal and Greece which are the main beneficiaries of EU funds targeted at Europe's poorer regions.

Britain's annual pounds 2bn budget rebate is still seen by Germany as part of the March negotiations. Although Tony Blair insisted the UK rebate was was "not negotiable", he reaffirmed his commitment to staying engaged in Europe. He indicated new flexibility on other areas arguing that Britain "will pay our share" of the costs of enlargement. That could result in a formula under which the rebate does not apply to the additional costs of admitting the candidate countries.