BRUSSELS (AP)--The UK softened its position in a hard-fought European Union budget battle June 17, hinting it could make concessions on its lucrative rebate in exchange for a promise to begin reforming the bloc's finances.

Prime Minister Tony Blair told Luxembourg Prime Minister Jean-Claude Juncker, whose country is chairing a tense EU summit, that before compromising on the rebate, the UK wanted to be certain that a process of reforming the EU budget was under way, Blair's official spokesman said.

That appeared to be a step back from Blair's earlier demand for immediate cuts in the agricultural subsidies, which disproportionately benefit France, in exchange for any changes to the EUR4.6 billion rebate.

"The priority for us is trying to reach any deal is that it guarantees that the process of reforming the EU budget has begun," Blair's spokesman said, briefing reporters on condition of anonymity.

The budget must "reflect the needs of today rather than 30 or 40 years ago," the spokesman said.

Blair argues the rebate is necessary to rectify imbalances in the budget caused by the huge subsidies the union gives its farmers.

Other nations say it has outlived its purpose, since the UK is far wealthier now than when Prime Minister Margaret Thatcher negotiated the rebate in 1984.

Date: 6/20/05

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