Blair: EU Budget Issues Hard to Resolve

British Prime Minister Tony Blair (search) said Tuesday that sharp disagreements remained over the European Union's budget and called for a wider debate of the future direction of the bloc.

Following talks in Paris with French President Jacques Chirac (search), Blair said differences remained over funding and spending plans for 2007 to 2013.

The disagreement comes just weeks after referendums on a European-wide constitution failed in France and the Netherlands, causing widespread concern about the bloc's future direction.

"It is difficult to see these differences being bridged," Blair said, describing the talks with Chirac as "amicable." He said Britain was continuing its talks with the EU presidency, currently held by Luxembourg (search), over the rebate.

Blair has refused to accept a freeze on the rebate, setting the stage for a contentious summit of EU leaders in Brussels, Belgium, later this week. He has claimed that during the past 10 years, Britain had paid 21/2 times more into EU coffers than France, even when the rebate is included.

Luxembourg has been pressing to resolve the rebate controversy before its presidency ends at the end of the month, but Blair insisted there was no rush.

"It is better to get the right deal than a slapped-together compromise that does not work," he said at a news conference at the British ambassador's residence.

The French leader has been one of the strongest critics of the British rebate worth some $5.5 billion a year.

Chirac told Blair that avoiding a dispute over the budget is important for Europe, according to the French president's spokesman, Jerome Bonnafont.

"Amid the political crisis in which Europe finds itself, it is important not to add financial difficulties," Bonnafont quoted Chirac as saying.

Addressing a sensitive subject in France, Blair said it was wrong to spend 40 percent of the EU budget on agriculture. He insisted more must be spent on research and technology, and science and development, to ensure that the bloc will remain competitive with emerging economies like India and China.

Blair also called for a period of reflection of some months over the EU constitution after it was rejected by voters in France and the Netherlands.

"The response should be to reconnect the priorities of the European Union with the priorities of the people of Europe," he said.