EU BUDGET DELAY MAY HIT REGIONS OF SPAIN AND ITALY

By M. Grajewski BIG regions in Spain and Italy as well as Slovenia stand to lose billions of euros in European Union aid unless EU leaders agree on the bloc's long-term budget this year, the European Commission warned yesterday. Negotiations on the EU's 2007-2013 budget broke down at a summit on June 17, mainly due to a row between Britain and France over attempts to link curbs on London's disputed rebate from Brussels coffers to future farm spending levels. Politicians doubt whether Britain will be able to steer the EU towards a budget agreement during its six-month presidency which started last Friday, because it cannot easily act as an honest broker on its own rebate. Regional Policy Commissioner Danuta Huebner said failure to achieve a deal this year could hit financially not only the EU's ex-communist newcomers, as has been long known, but also major regions in Spain, Italy, Greece and possibly eastern Germany. Slovenia, the richest ex-communist new member state, might lose its right to much of the EU's socalled structural funds if agreement is only clinched at the end of Austria's presidency over the bloc next June, as many diplomats expect. Those regions are likely to exceed the eligibility threshold for the main structural fund. If an agreement comes next year, the EU executive will have to use 2001-2003 as the reference period, which will show bigger relative wealth in the regions. Huebner did not name individual regions, but a Commission official said the Spanish regions of Galicia and Castilla-La Mancha could be among those involved. Huebner said Britain should use a special summit on the EU's social model in October to reach a budget deal or a least an initial political accord with details to be worked out later.