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. Last Updated: 07/27/2016

Blair a Rising Force in Torn EU

BRUSSELS -- The European Union's lurch into political and financial limbo hands British Prime Minister Tony Blair an opportunity he will relish to shape debate in the bloc.

But his image as Europe's bad boy after playing hardball on the budget and entrenching euroskepticism at home could thwart the prime minister's elusive ambition to put Britain at the heart of the EU, analysts said.

Blair picks up the baton of the bloc's six-month presidency from July trumpeting a mission to drive liberal economic reform.

He is armed with an economy that is the envy of many of his continental peers and is politically stronger at home than French President Jacques Chirac and German Chancellor Gerhard Schr?der -- fierce opponents of his bid to reform the budget.

He also chairs the Group of Eight industrial nations this year and has the ear of Washington.

"Blair and the U.K. presidency are in a very strong position. He has just won an election and the economy is a role model for Europe," said Greg Austin, an analyst at the center-left Foreign Policy Centre think tank close to Blair's New Labour philosophy.

But until the dust settles, Blair will not know the political cost in Europe of his staunch defense of London's budget rebate at the EU summit that collapsed on Friday night.

Many leaders blame him for torpedoing a seven-year budget deal after he refused to yield any of London's payback from EU coffers without changes to farm subsidies that largely benefit France.

His refusal to compromise on the rebate angered new Eastern European member states he had been keen to woo, such as Poland, and the dispute could leave Blair thin on allies just when he gets his moment in the sun, analysts said.

"I think this makes it more difficult for Blair's presidency," said Emil Kirchner, professor of European Studies at Essex University. "The next six months won't be easy. I don't think the budget will be resolved during the U.K. presidency."

Aside from the budget battle, Blair has a major handicap in trying to exercise leadership in Europe, which his eight years in office have done little to change.

There is no prospect of Britain joining the euro any time soon. London does not even sit on the EU's main economic policy body, the Eurogroup of finance ministers of the 12 countries that share the single currency.

But Blair did succeed in his goal of putting budget reform on the table -- with the backing of Sweden and the Netherlands. London was one of five of the EU's 25 states that opposed a final compromise proposal for the 2007-13 budget.

The debate over the treaty also went his way. Blair shelved a referendum after France and the Netherlands voted "no" on the charter.

But Blair will need all his diplomatic acumen if he is to move forward on budgetary and economic reform during his EU presidency given the ferocity of the British-French spat.

He also faces the difficult task of starting planned accession talks with Turkey in October amid rising resistance to further enlargement.

But the prime minister may be emboldened, seeing his EU presidency and chair of the G8 as his final chance to secure a legacy to overshadow the unpopular Iraq war, analysts said.

If Blair can capitalize on the opportunity, he could redefine himself and even prolong his premiership, thwarting the plans of finance minister and leader-in-waiting Gordon Brown for an early handover. Or at least he could bow out on a high.

Blair has said he will serve a full third term, but analysts expect him out well before the next election, due in 2009-10.

He may want to hang on for elections in Germany in September and in France in 2007, which could usher in leaders who are keener on liberal economic reforms. On the other hand, a perceived failure at the EU and G8 could force him out sooner.

Before then, progress will depend on how quickly tempers cool and on whether Blair can learn to soften his own tone when talking to his EU partners about economic reform, analysts said.

And opinion polls suggest two-thirds of Britons would reject a constitution drawn up for an enlarged bloc, although Blair may be saved from ever putting it to a vote after EU leaders agreed to consign it to the deep freeze.