The presidency of the European Union is usually overrated, not least by the current holders of the six month post.

In reality, the job consists mainly of chairing meetings of the Council and of speaking on the Council’s behalf in the European parliament. Few British ministers over the last six months have excelled in their parliamentary role, being variously pompous, pedestrian and, not infrequently, late for the start of debates.

The exception, of course, was Tony Blair.

The prime minister’s most admirable performance came not at the start of his presidency but at the end, on December 20, when he reported back to MEPs after the critical meeting of the European Council the previous week.

On this occasion Blair had to explain and justify the agreement on the EU’s multi-annual financial framework for the period 2007-13. For Blair it was much more than a public relations outing because the parliament has the power to approve or reject the package proposed by the European Council and, within certain parameters, to adjust figures between headings.

His presentation – which skilfully mixed confidence and contrition - was admirable, not just for its content, but also for the way in which he bashed ‘reactionaries’ and derided ‘commentators’.

Tony Blair’s negotiating position at the start of the European Council had been to cap EU expenditure at 1.03 per cent of gross national income and to offer to reduce the UK rebate by €8bn.

Josep Borrell, President of the Parliament, gave a forceful first speech about the inadequacy of these proposals. 36 hours later, after clever footwork by Commission President José Manuel Barroso and pressure from Angela Merkel on her first excursion as German Chancellor, Blair finally accepted a ceiling of 1.045 per cent GNI and a reduction in the British abatement of € 10.5bn – meaning that the UK’s net contribution to the EU budget will rise by 63 per cent over the seven year period.

He was not alone in making concessions: President Chirac accepted that France’s net contribution would rise by 116 per cent.

Mr Blair described the modest deal as a ‘fair settlement for the present time’.

It contains some clever elements. R&D spending is set to rise by 75 per cent by 2013. Central European countries will have to co-finance a smaller proportion of EU structural projects than the richer West. There will be more flexibility to transfer money away from direct farm payments towards rural development. And, above all, an agreement has been reached to undertake a radical review of the whole EU financial system, including both the CAP and the UK rebate, in 2008.

This is a big breakthrough. When the constitution was being drafted, it was the French who blocked reform of EU expenditure and the British who blocked reform of EU revenue: now, happily, both are confounded.

There is a further cause for satisfaction. The Commission’s financial review will coincide with the end of the ‘period of reflection’ about what to do with the constitution whose ratification is now stalled. As the likely outcome of that reflection will be a decision to undertake a judicious renegotiation of the constitution during 2008-09, the results of the financial review can be integrated into the revised text.

An improved financial system for the Union would not only greatly enhance the quality of the constitution but also open up the possibility of a larger shift of public spending from the national to the EU level.

Blair himself was refreshingly candid about this. He told MEPs: “I would agree there should be a bigger budget if it was a reform budget”.

So Tony Blair has survived his presidency with something to his credit. Not least, the compromise reached on the UK rebate should reduce some of the hostility and resentment about British European policy in general. 2006 begins with huge relief, therefore. If the Austrians, who take over the presidency, decide to reactivate the debate about the constitution they will have the support of the parliament.

Public opinion is already heading in the right direction. The recent Eurobarometer poll suggests that almost half of all EU citizens want the constitution to be renegotiated. Only 13 per cent want it dropped completely. Even 46 per cent of the British agree with the concept of a European constitution.

By the time of the next European parliamentary elections in 2009 – after the departure of Blair and Chirac - there should be plenty of big choices for voters to make about the future of Europe.

Andrew Duff’s book, The Struggle for Europe’s Constitution, has just been published by the Federal Trust and I.B. Tauris. He is the parliament’s co-rapporteur on the ‘period of reflection’.

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