EU leaders agree on deal to finance adding new countries

BRUSSELS, Belgium -- European Union leaders struck a complex deal Friday to finance the EU's historic expansion eastward, removing a key obstacle to admitting 10 new countries, including eight from the former Soviet bloc.

France and Germany clinched the surprise breakthrough over how to contain farm spending, ending months of wrangling over how generous to be to the poorer newcomers at a time when even the larger nations are struggling with their own budgets.

The deal calls for funneling billions of dollars in farm and regional aid to the newcomers -- Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Cyprus and Malta -- gradually, over a 10-year period.

The agreement settles fears of runaway farm spending once the newcomers join.

Chancellor Gerhard Schroeder called it "a great day for Europe and a good day for Germany."

The traditional alliance between France and Germany proved vital in nailing the deal. The countries stood together at the cradle of the European Union half a century ago, and now are steering the 15-nation EU toward nearly doubling its membership.

"The construction of Europe needs agreement between France and Germany," French President Jacques Chirac said. "If it is there, Europe is functioning."

After hashing out an agreement Friday, Chirac and Schroeder had little trouble rallying the other leaders behind it.

Danish Prime Minister Anders Fogh Rasmussen, who chaired the summit, is to brief the leaders of the 10 candidate countries in Copenhagen, Denmark, on Monday.

After that, formal invitations to join the European Union will be issued at a Dec. 12-13 summit in Copenhagen. After membership treaties are drawn up, signed and ratified, the newcomers would formally join on Jan. 1, 2004.

Slowly curbs spending

Germany had come into the two-day summit seeking to cut the costs of EU farm program, which eats up some $40 billion a year, or about half the EU budget. Germany was backed by the Netherlands, Britain and Sweden.

France wanted to keep funds to its farmers going, while Greece and Portugal wanted continued subsidies for their poor regions.

The deal struck Friday provides for "generally considerable savings," Schroeder said. It will slowly curb spending over the next decade, he said.