German Chancellor Angela Merkel is one of the few people who can be happy about the European Union summit in Brussels which started on Thursday. After all, she's never been to one before. But most of the 25 foreign ministers and leaders of EU member states will suffer an awkward sense of déjà vu. Since the last summit in June, not much has changed. Negotiations over the EU budget -- the so-called financial projections for 2007-2013 -- have ground to a halt.

British Prime Minister Tony Blair is blamed by most observers for having brought the last summit to a standstill by sullenly insisting on holding on to the "British Rebate" -- the money the UK gets back from the EU in return for not benefitting from agricultural subsidies. This time, Blair's role is that of mediator. Great Britain is the current holder of the rotating EU presidency, putting Blair in the awkward position of having to defend his country's position while at the same time serving as chief diplomat.

The net result of his efforts so far? Nothing. His compromise suggestion -- involving budget cuts mainly in Eastern Europe -- still pits the British against the rest of the EU.

Which is where Merkel comes in. According to German government sources in Berlin yesterday, the chancellor has now, since being sworn in on Nov. 22, become "fully involved" in EU business. Already, it seems, eight of her colleagues at the EU have given her private promises to keep the summit talks from failing. Success is "urgently needed," the Berlin sources said; the idea is to send "an important signal to Europe."

"Leave your vanities at the door"

The rest of Merkel's government has likewise been on message. Foreign Minister Frank-Walter Steinmeier explained in a statement in German parliament on Thursday how important a financial framework is for the EU's long-term plans. Above all, he said, failure would hurt the newest member states -- the ones already approved for money from Brussels. Steinmeier called on the summit members to leave their "vanities" at the door. "The later we reach an agreement, the harder it will be," he said.

If such statements seem familiar, they should. The same promises were made prior to the last summit in June. Back then, government leaders were still trying to digest the veto of the European constitution by Dutch and French voters; they declared a "timeout to think." Since then, it seems as though there hasn't really been much of a "time in." The word then was that a crisis over the constitution only made it more important to agree on a budget and show a capacity to act. But even this stark portrait of the situation couldn't calm the uproar between England and France, who both refused to accept billion-dollar cutbacks. The EU was in "deep crises," diagnosed the frustrated former Council president, Jean-Claude Juncker, from Luxembourg.

Poker in Brussels

The budget is traditionally one of the most bitterly fought battles in Brussels. The last budget, for the period from 2000 to 2006, was presented by Gerhard Schröder, president of the Council in 1999. Now that the EU has 25 members it has become even more difficult to represent everyone's interests. The crisis suffered by countries which have social market systems has meant that member states are particularly sensitive about defending their own piece of the pie.

Adding to the difficulties is the fact that, in Brussels, negotiating is a bit like playing poker: At the outset all those taking part have to bluff. "No deal is better than a bad deal," is what the British and Polish politicians have been saying for days. And the German government is playing along too -- despite Steinmeier's Thursday appeal for a return to "European good-sense." Merkel on the other hand said "there is no compulsion to achieve unity," with the aim of applying pressure to avoid cutting structural funds for eastern Germany. 

And it's been the same bluffing game for weeks. The actual summit begins Thursday evening with two separate dinners -- one for government heads, the other for foreign ministers -- at which each country is allowed to once again present their already familiar starting positions. After that, the council presidency starts sounding out possibilities of compromise. On Friday the sparring is broadened to all those present. Now and then, particularly tough cases are sent to the council president's confessional for ironing out. At the same time there is a whole range of bi-, tri- and multi-lateral talks in the city's most elegant hotels. Whether the summit is successful-- or not -- is generally clear already late on Friday night.

And this time around, all signs point toward failure -- even if the acrimony between France and Britain has lessened and the German government claims an improved atmosphere since the summer. The main reason for that improved atmosphere is that, so far, Blair has refrained from questioning the deal on agricultural subsidies which Chirac and Schröder agreed on in 2002. The British prime minister has also officially recognized that the "British rebate," which is worth around €5 billion every year, is an "anomaly." The UK's modified position has given Berlin room for hope. But according to German government sources on Wednesday, Blair has not yet compromised enough.

Here Comes Tony

When Britain took over the six month presidency of the EU this summer, hopes were high. "Here comes Tony", rejoiced the Wall Street Journal. The British prime minister immediately caused for enthusiasm by stepping up to the European parliament and calling for reforms. In the eyes of the commentators he instantly transformed from bogeyman to bearer of hope.

Half a year later not much remains of Blair's reform plans, except for an unpopular drive to tighten the belt on the EU budget. The Eastern European countries in particular are reluctant to accept an eight percent cut in their subsidies. Changes to the agricultural subsidies have been postponed to a later date. As far as trimming the British rebate goes, Blair has public opinion in his own country against him, which limits his maneuverability. "Poor Europe. It needs Harry Potter but it got Tony Blair" comments British MEP Denis MacShane in the German newspaper Frankfurter Allgemeine Zeitung.

The British government has not, however, given up hope yet. The most recent proposal has not been condemned "lock, stock and barrel" said Steinmeier today. An economically sparing budget is no "less European" and he is going into talks with a certain amount of confidence. One possible compromise could look like this: The British receive a hard and fast agreement for a review of the agriculture subventions, say in 2008. In exchange they have to be open for further compromises regarding the British rebate, perhaps its permanent scrapping after 2013. They would also have to pay their share of the expensive process of EU expansion.