Following close on the heels of the European Union constitution meltdown in France and the Netherlands, the union now appears headed for its second major crisis in the course of just a few weeks. The next lightning rod issue on the agenda is the EU's budget. Germany and other member states are demanding concessions from Britain on the multi-billion euro rebate it has received since 1984. The compromise was made with then Prime Minister Margaret Thatcher because of the relatively diminutive size of the British farming sector compared to France, Germany and other member states at the time. But now, Britain is far more prosperous -- indeed, the economic envy of Germany and France -- and other EU net payers feel they're getting a bad deal. They insist the farming factor should be overlooked, indeed that it is overshadowed by England's current riches and the expanding needs of a larger EU.

But Blair has refused to budge on the so-called UK rebate unless the EU is willing to reform its agricultural policies -- a Byzantine structure of subsidies that eats up more than 40 percent of Brussels' overall budget. During a meeting with Blair on Monday evening, German Chancellor Gerhard Schroeder said he expected his EU neighbors to show a willingness to compromise on the Brussels financing issue. "We expect all partners to abandon national egoisms," he said. So far, Britain has rejected a proposal by Luxembourg to freeze the rebate between 2007-13. Most German newspapers think that 10 Downing Street should meet Berlin somewhere in the middle.

"Constantly grousing against Europe," writes the mass circulation Bild, "and at the same time getting billions of euros of budget rebates in Brussels -- that truly is not the gentlemanly British way." The British, the paper rails, always say "no," when it comes to European initiatives, but they are always keen on squeezing billion-euro discounts from others, especially the Germans. "We can do without 'Europeans' like that," the editorial exclaims. It goes on to call the billion-euro "preferential treatment" for the British an "extortive relic from Thatcher times that is slowly making us Germans really angry." Germans, the paper complains, are paying, paying, paying. "No other country in Europe has had to cope with such radical change as Germany, and no other country is as economically and financially exhausted." The paper calls for Britain's "extra sausage" to be put to an end. Otherwise, it warns, the EU may have a new meaning here: "Extremely Unpopular".

The Financial Times Deutschland, the British business broadsheet's Teutonic cousin, also sees a relic in the rebate. "The British rebate is absurd and unfair," the paper writes. "The erstwhile sick man of Europe has in the last two decades blossomed into an economic power envied by many." But the paper does concede that Blair is correct in his argument that the special treatment of the British is less abstruse than another thing that costs the EU citizens much more money: the agricultural budget. "Pledging on the pages of the Lisbon Agenda to make Europe the most competitive economic area in the world, waxing lyrical about a scientific society and modernization and at the same time investing 40 percent of the entire EU budget on the agricultural sector is not a European vision, it's schizophrenia," the paper adds. It concludes with salvos directed at France over its unending love affair with EU handouts for farmers. "If France wants to retain the luxury of a heavily subsidized agricultural sector, then let it. But not at the cost of the community."

FTD's larger-circulation competitor, Handelsblatt, agrees, saying it's time to kill two birds with one stone and make the British give up their rebate while at the same time forcing the French to forego their lavish farm subsidies. "Blair is right to criticize the fact that the EU still spends more money on its agricultural policies than on research and innovation," Handelsblatt comments. But the paper derides Blair for his constant attempts at tying any reductions in the so-called "UK rebate" to EU budget reforms. "Britain has to compromise just as much as Germany and France," it says, and that's the only way to avoid a blockade at this week's EU summit in Brussels. "If he continues to dig in his heels, he will be made responsible if the summit fails," it concludes. "That would be a heavy burden on the (coming) British EU presidency. Blair would go into history not as the man who modernized the EU, but the one who buried it -- even if he did want to change the right things."

Though the conservative daily Die Welt finds much truth in Britain's arguments, it has little sympathy for the rebate. But that doesn't stop it from unleashing a tirade over the EU's misplaced budget priorities. "Current negotiations over finances show far too clearly how pre-occupied the EU is with backwards policies." If the latest budget compromise proposal is used as the yardstick, the paper writes, then agricultural subsidies and regional funding would make up 85 percent of all EU spending. "You won't impress anyone with this kind of Europe. After almost 50 years of regulation and subsidies, it is time to examine European agricultural policy, even if France strives against this." It says reform of the EU will be nearly impossible with cuts to the largest spending blocks. "Not least," it concludes, "because without these cuts in agricultural subsidies a compromise from London on the British rebate is unlikely. This rebate is one of Europe's anachronisms, as is the agricultural policy."

In a separate issue, German papers on Tuesday continue to comment on the debt relief deal agreed to by the world's richest countries this weekend.

The center-left Sueddeutsche Zeitung says it would be best if Europeans dampened their euphoria over the forgiven debt. To celebrate it as a historical moment would show more political naivety than any kind of sharpened view towards the realities of Africa. "In fact, the debt relief was the only point upon which the bickering countries of the developed world could find unity in their African policies." This step, it adds, won't be very painful for the rich countries of the north. Thus, the "new partnership" the Brits are calling this, deflates quickly when you consider how difficult it is for countries to mobilize capital for the poorest people in the world. "When it comes to implementing a long-term strategy against poverty, the north fails," it opines. "It is incapable of introducing a fair system of trade. It is incapable of providing the funds needed in the battle against AIDS or malaria. But above all, it is incapable of making greater sacrifices to help the suffering people in the world."