The European Community was set toplunge into an ever-deepening budget crisis after ministers
failed to reach agreement on plugging a gap in the
near-bankrupt Community's finances, diplomats said.
    As EC budget ministers ended six hours of talks in
Luxembourg, diplomats said there was little basis for an accord
amongst the trading bloc's 12 member states.
    The EC executive Commission says the Community faces a
deficit this year of at least five billion European Currency
Units and could be forced to choose between massive spending
cuts or bankruptcy.
    It has appealed to member states to pay an extra 1.5
billion ECUs to help meet the deficit, caused by soaring farm
spending and falling revenues.
    But hardliners Britain and West Germany have insisted that
there can be no extra cash for the Community this year and
instead call for a clampdown on farm spending, which absorbs
two thirds of the EC budget.
    "We have to make clear that expenses should be based on
income," West German Minister of State Hans Tietmeyer told
reporters.
    "There is no way the Germans will agree to extra financing
in the form of national contributions," he added.
    A second Commission proposal, which would plug most of the
budget gap by paying member states in arrears rather than in
advance for their spending on Community farm policies, was also
far from agreement, diplomats added.
    The proposal, strongly backed by Britain and West Germany,
would save up to four billion ECUs if payments were delayed for
two months.
    But poorer member states, which would have to borrow funds
to cover the delay, complain the change in the system would
unfairly impose too much of the burden on them.
    The European Parliament is also expected to refuse an early
debate on the changeover in the farm payments system, further
delaying any moves to solve the deficit problem, parliamentary
sources said.
 Reuter
