LONDON ?British Prime Minister Tony Blair, acknowledging that London¡¯s rebate from EU coffers is an anomaly that ¡°has to go? said on June 21 he believed he could get a deal on the European Union budget in the next six months.

The head of the executive European Commission and Italy¡¯s prime minister played down the turmoil unleashed by last week¡¯s failure to agree on a long-term budget and voiced optimism a deal could be reached under Britain¡¯s EU presidency from July 1.

But the Netherlands, which joined Britain in blocking a deal on the long-term budget at an acrimonious summit last week, voiced scepticism about any early settlement, saying there was too much bad blood among EU leaders.

French Prime Minister Dominique de Villepin raised the temperature further by reaffirming France¡¯s refusal to bargain away EU farm subsidies in return for a reduction in the British refund, the issue on which the budget negotiations foundered.

Blair takes over the chair from Luxembourg amid a double crisis over the failure to agree on the 2007-13 budget and the rejection of the EU constitution by French and Dutch voters.

¡°We are prepared ... to recognize that the rebate is anomaly that has to go, but it has to be in the context of the other anomaly being changed as well,?he told reporters in a striking change of tone.

It was the clearest indication so far that he is willing to bargain away the annual refund won by Margaret Thatcher in 1984 provided France relents on an eventual reform of farm subsidies.

At the ill-tempered Brussels summit, President Jacques Chirac rejected any linkage between the British rebate and reforming the Common Agricultural Policy before 2013.

¡®Modern?priorities

Poland, the biggest of the poor east European newcomers that stand to lose most from a budget delay, announced an initiative to try to salvage a deal, saying it would use a meeting with the French, German and British foreign ministers on June 27 to press for an early deal.

The summit sharpened an ideological divide within the EU between free-marketeering economic liberals led by Britain and advocates of a European model of social and rural protection led by France and Germany.

German Chancellor Gerhard Schroeder, facing a likely general election defeat in September, said in Berlin that Europe faced a choice over its future direction.

¡°Do we want a united Europe that¡¯s capable of action, a really political union as the constitution foresees. Or do we just want to be a big free-trade zone, do we want to go back from the European Union to the European Economic Community??he said.

Britain won the rebate when it was among the poorest members and the CAP took 75 per cent of the budget. It is now among the richest and farm subsidies take 43 per cent of EU spending.

Drawing applause in parliament, Villepin branded the British cheque ¡°an inheritance from the past, an outdated hangover which, today, has no purpose ... ¡®Ancient Regime?expenditure.?

¡°These two expenditures have nothing, and I mean absolutely nothing, in common,?he declared, describing farm subsidies as ¡°spending that is indispensable to meet our European and national needs, our food requirements.?

Blair, who accepted an EU deal in 2002 pegging farm spending at its current level until 2013, now says it is too high and scarce funds must be shifted to more ¡°modern?priorities.

After talks with Swedish Prime Minister Goran Persson, who also rejected the budget compromise to demand a cut in Stockholm¡¯s net payments, Blair told reporters: ¡°It is possible (to get a deal) and we have got to work for it.?

Still time

European Commission President Jose Manuel Barroso and Italian Prime Minister Silvio Berlusconi, attending an EU inauguration ceremony in Italy, both said there was still time for a budget deal and talk of a crisis was misplaced.

¡°Hopefully we can achieve a good compromise during the next presidency, the British presidency,?Barroso said.

Berlusconi was critical of Blair, his ally in the US-led Iraq war, saying: ¡°We were very close to a deal ... because of the responsibility of the British, as he (Blair) is president, so he should show himself to be generous.?

Many EU diplomats say Blair stands little chance of clinching an agreement during his presidency both because of the hostility between London and Paris, and because Britain can hardly act as an honest broker on its own rebate.

¡°I don¡¯t see a solution in the short term. Things were said that I never heard during 11 years as ambassador in Brussels,?Dutch Foreign Minister Bernard Bot told De Volkskrant daily.

Bot said Schroeder had accused the Dutch of ¡°egoism?for refusing to accept the compromise while Chirac went further.

¡°He talked about fat, bloated countries which are not ready to do something for poor countries, and looked at us. That is obviously not the way to get others to make concessions,?Bot said, blaming France for the summit¡¯s failure.

Sweden¡¯s Persson and Danish Prime Minister Anders FoghRasmussen, leaders of two wealthy north European countries, both insisted the EU budget should subsidize the poorest states and not prosperous ones, a reference to France, Italy and Spain. At the same time, Britain and the Nordic countries want more EU spending focused on promoting research and development, innovation, the environment and training, much of which would benefit the richer countries more than the poorer ones.

(Agencies via Xinhua)