Barroso: EU faces permanent crisis
(CNN) -- The head of the European Union has warned that the 25-nation bloc faces a "permanent crisis" over its constitution and urged leaders to "pause for reflection" on the future.
Jose Manuel Barroso said Wednesday the EU needs to win back the trust of its citizens after France and the Netherlands rejected the charter in referendums last month.
"If not, there will be a permanent crisis," Barroso told reporters in Brussels.
EU leaders should "pause for reflection," he said, adding: "I think that's the best way to save the constitution. We should use the break to deepen out reflection on this."
Barroso's comments came amid growing political uncertainty following the No votes on the constitution, along with a budget disagreement that is expected to further fracture the bloc just one day before EU leaders meet for a summit in Brussels.
On Wednesday, Luxembourg Prime Minister Jean-Claude Juncker waded into the row over funding the newly expand bloc, saying he saw no immediate solution to the crisis.
"I am pretty sure we won't get the financial perspectives through at this summit," Juncker told a European Parliament committee in Brussels.
Juncker, whose country holds the EU presidency, made his comments just hours before he was to present a compromise proposal on the 2007-2013 budget for EU leaders.
The main stumbling point to a funding agreement is Britain's long-standing rebate on EU budget contributions, an issue that has fueled a feud between Britain and France.
France has been the most vocal of the EU's 25 members in calling for a review of Britain's $3.1 billion (€2.6 billion) a year rebate, which many believe is no longer valid given the UK's strong economy.
Without the rebate -- won by former Prime Minister Margaret Thatcher two decades ago -- Britain argues that it would have paid 15 times more than France into EU coffers in recent years.
Blair refuses to consider changes to the rebate unless the EU reopens the debate on huge agricultural subsidies that benefit France.
Juncker has indicated that cuts to agricultural handouts will be on the table at the summit talks, which begin Thursday.
"No budget heading ... will escape cuts," told the European Parliament's economic and monetary affairs committee, The Associated Press.
Blair acknowledges that there remain a "sharp disagreement" over the future EU financing between him and French President Jacques Chirac.
Following a meeting between the two leaders Tuesday in Paris, Blair acknowledged a gulf remained between the UK and France.
"In respect of future financing, it is very difficult," Blair told reporters.
"The meeting I have just had with President Chirac was immensely amicable. But obviously there is a sharp disagreement," he said.
"I think it is difficult to see these differences being bridged, but of course we continue to talk to people including the presidency about it."
Tuesday's meeting in Paris was the final leg of a four-country push by Blair to forge a consensus on issues such as poverty and climate change ahead of the Group of Eight summit next month.
It followed talks earlier in the day with Juncker in Luxembourg. On Monday, Blair met with German Chancellor Gerhard Schroeder and Russian President Vladimir Putin.
But G8 issues were overshadowed during the Paris talks by the funding squabbles within the bloc.
During his visit to Moscow, Blair won the backing of Putin for an agreement on tackling African poverty and climate change -- two issues he also raised with Schroeder.
"We fully support the ideas of the British leadership and in particular of the prime minister ... for the forthcoming summit," Putin said at a joint news conference at his country residence west of Moscow.
Blair said progress could be made before the G8 summit July 6-8 in Scotland, where Britain will assume the presidency of the group, but there was "obviously a lot of hard negotiating to do." (Special report)
He said an agreement by G8 finance ministers to write off more than $40 billion of poor countries' debts was a good omen. The G8 ministers also said 20 other countries could be eligible for debt relief if they meet targets for good governance and tackling corruption -- bringing the total package to more than $55 billion. (Full story)
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Associated Press contributed to this report.
