"Europe is in a Profound Crisis"

"People will tell you next that Europe is not in a crisis," Luxembourg Prime Minister Jean-Claude Juncker, who holds the rotating EU presidency, said after a two-day summit ended in acrimony.

"It is in a profound crisis."

Fundamental differences between Britain, which clung to its long-cherished 5 billion euro budget rebate, and most of its 24 EU partners proved impossible to bridge in a desperate, last-minute round of EU diplomacy Friday night.

"We tried to give Europe a new financial perspective. We have failed," a visibly disappointed and frustrated Juncker said.

In a bitter round of early-morning finger-pointing, nearly all participants blamed Britain and the Netherlands for the failure of a compromise on the 2007-2013 budget worth about 100 billion euros a year.

Targeting the guilty

"I believe a deal would have been possible. The fact that there wasn't one is solely due to the inflexible stance of the British and the Dutch," German Chancellor Gerhard Schröder told reporters. The Dutch had demanded a cut in their annual budget payments, whereas Britain clung stubbornly to its rebate, which is expected to grow to about 7 billion euros per year in 2007.

Those who are responsible for the failure in Brussels must now "stand up and answer to history and above all to the youth of Europe," admonished Schröder. "It is a bleak day for Europe."

"In reality we were close to an agreement," added an exasperated French President Jacques Chirac, saying he "deplored" Britain's stance.

For his part, British Prime Minister Tony Blair denied being isolated by his partners at the summit table. "We were not alone at the table," he said.

"I hope we can move forward from here," Blair told reporters, as he reiterated his call for a thorough review of the way the European Union spends its money. In two weeks, the rotating EU presidency will pass over to Britain.

Shame on the rich members

In a desperate attempt to save the negotiations, the 10 EU newcomer states called for new efforts to strike an accord, offering to dig deeper into their pockets if it would help. The call went unheeded.

Juncker, trembling with emotion, said their offer made him ashamed. "When I heard one after the other, all the new member countries, each poorer than the other, say that in the interest of reaching an agreement they would be ready to renounce some of their financial demands, I was ashamed."

Schröder, who also tried to mediate a compromise, praised the efforts of the 10 new members as the sole "bright point" in the debate. Chirac, too, said their offer was "very impressive compared to the egoistic position of one or two rich countries."

Rift widens in EU

The budget row has unmasked a deep gulf between countries like Britain, which want a lean, market-oriented alliance and others who want a deeper union with social benefits for citizens.

Juncker accused some countries of lacking the political will to reach an agreement. In an apparent attack on Britain, he said those who wanted Europe to be a simple free trade zone should explain how it could work.

"During this budgetary debate there were two conceptions of Europe that clashed and will always clash," he confessed. "There are those who, in fact without saying it, want the big market and nothing but the big market, a high level free trade zone, and those that want a politically integrated Europe," he said.

"I have felt for a long time this debate would blow up one day."