Steinbrück: Germany Wants to Cut EU Budget Contributions

"Our net payments must fall," he told the Welt am Sonntag newspaper. It was not possible "one day to urge Germany to respect the Maastricht criteria" while "already the next day it is not being ruled out in Europe that Germany should strengthen its position as a net contributor," he said.

Steinbrück is a member of the Germany's Social Democratic Party, which forms a grand coalition government with the conservative Christian Union parties led by Chancellor Angela Merkel.

Since 2002 Germany has been in breach of the Maastricht criteria, encoded in the EU Stability and Growth pact, which lay down among other requirements that a nation's budget deficit should not exceed three percent of gross domestic product.

On Monday Steinbrück will make his debut as finance minister at a meeting of EU economy and finance ministers in Brussels.

"There exist in Germany some special factors, which we need to explain to partner countries," he told the newspaper.

These included the reunification of west and east Germany after 1990 and the reforms launched in 2003 by then chancellor Gerhard Schröder in the context of the Agenda 2010 project.

Germany and Sweden are the two biggest net contributors to the EU budget.

EU budget deal impossible?

Britain meanwhile warned on Saturday that it may not be able to secure a long sought-after deal on the European Union's 2007-2013 budget at the bloc's next summit in just under two weeks.

The government in London, which holds the EU presidency until Dec. 31, is due to submit its first concrete proposals on resolving the budget impasse to its counterparts on Monday.

"I think probably by the end of next week we will have a clearer idea of whether a deal can actually be done," Britain's minister for Europe, Douglas Alexander, told BBC radio. "If a deal was not done then I think it would be greatly to our disadvantage, but that may be where we end up. We are not prepared to sign any deal. We want to try and get the right deal."

Britain's offer will be studied by EU foreign ministers at a specially called "conclave" on Wednesday in hopes that a deal can be inked by the bloc's leaders at their summit in Brussels on Dec. 15-16.

Britain has warned that it wants substantial changes made to the previous budget plan, tabled by the Luxembourg presidency in June and which was rejected by Britain, Finland, the Netherlands, Spain and Sweden.

Leaked details of Monday's offer suggest Prime Minister Tony Blair will propose cutting funds to the newcomer states in central and eastern Europe.

The European Commission, the EU's executive branch, last week urged Blair not to take from the poor to give to the rich.

Britain ready to budge?

The deal is blocked on two key issues: Britain's refusal to surrender its substantial budget rebate, and French resistance to reform the EU's farm subsidy system, of which it is a major beneficiary as the biggest agricultural producer in the Union.

Alexander hinted that Britain could be prepared to reduce its rebate, a jealously-guarded mechanism for cutting its financial burden because it profits little from subsidies.

"We were clear at the start of our presidency, that we did recognize it was fair for each of us to make contribution towards those costs of enlargement in these poorer countries that have come into the EU," he said.

The rebate averaged 4.6 billion euros ($5.4 billion) annually between 1997 and 2003, but critics say Britain's economic position has greatly improved since it was first granted.