The current president of the EU, Luxembourg's Jean-Claude Juncker, attempted to create some movement on the thorny budget issue with a series of confidential one-on-one talks with EU heads of state prior to foreign ministers' meeting. But diplomats from Luxembourg aren't counting on any concrete results until after their last bilateral meeting with British Prime Minister Tony Blair on Tuesday.

Only if Britain were to forgo its multi-billion euro EU budget rebate will there be agreement by the end of this week's general EU summit on the EU budgetary framework for the period 2007-2013.

British rebate

For more than 20 years now, Britain has been granted a rebate on its EU contributions that currently totals 4.6 billion euros ($5.63 billion) annually. The remaining 24 member states at least want to achieve a freeze on the rebate, which was granted to Britain 21 years ago when the island nation was among the poorer states in the union. Although its situation has fundamentally changed, the British government has rejected every attempt to renegotiate, something Tony Blair stressed again last week.

"The UK rebate will remain and we will not negotiate it away. Period," Blair said before parliament.

Other net contributors Germany, the Netherlands and Sweden are also demanding a sort of rebate, arguing that on a per capita basis, their payments into Brussels' coffers are too high. Germany contributes between six and seven billion euros a year.

Italy and Portugal have rejected the planned cuts to regional subsidies included in the negotiation package. Italian foreign minister Gianfranco Fini warned earlier that Italy would not hesitate to use a veto on the budget proposal.

The nine member states in Eastern Europe are demanding more financial support, and France is refusing to budge on the issue of agricultural payments, from which it benefits the most. Germany and the five other net contributors officially support capping the budget at one percent of the EU's gross national income, although it's on this point that a compromise would be most likely.

"Masterstroke"

It would be a masterstroke by Juncker were he to succeed in unravelling this complex knot of budget issues, say EU diplomats in Brussels.

Following the negative constitutional referendums, the Netherlands and France have barely any room to manoeuvre. German Chancellor Gerhard Schröder is widely seen as a lame duck and will most likely not get drawn into any wide-reaching obligations. Juncker is of the opinion that the heads of state need to prove their willingness to act with a budget compromise, now that the EU constitution has been put on ice.

The constitutional crisis is not officially on the EU foreign ministers' agenda. How the ratification process is to go on and in which direction the EU should develop is a matter for the heads of state to resolve at their summit later this week.

Confirming expansion plans

In Luxembourg, the foreign ministers want to reconfirm the assurances that have already been given for the next round of expansion. Romania and Bulgaria are due to be taken into the fold on Jan. 1, 2007, if they have completed all the required reforms. The beginning of accession talks with Turkey on Oct. 3 will be reaffirmed. A date for beginning talks with Croatia is not yet in sight due to unsatisfactory cooperation from Zagreb with the War Crimes Tribunal in The Hague.

The EU continues to hold onto the goal of allowing the remaining Balkan nations -- Macedonia, Bosnia-Herzegovina, Albania and Serbia-Montenegro -- into the club, despite the fact that there is no foreseeable agreement on a constitutional framework for an EU of 30 or more members.