The summit deadlocked in bitter dispute over subsidies, rebates and financial aid. An afternoon of arm-twisting by senior European Union officials did little to persuade countries, in the words of German Chancellor Gerhard Schroeder, to make a sacrifice and forge a compromise.
"Europe is not in a state of crisis, it is in a state of profound crisis,"
said Jean-Claude Juncker, the prime minister of Luxembourg, whose country, as rotating president of the EU, headed the summit.At a news conference early Saturday, Juncker described a negotiation "in millimeters." Seemingly every country raised objections to the 2007-13 budget, divided over whether the alliance should be an integrated political entity or simply a free-trade zone.
"I'm sad and ashamed, to a certain extent," Juncker said, condemning countries for their lack of political will and lamenting that poorer countries seemed more willing to make sacrifices than their richer partners. "In a way, we go back to square one."
Reaching agreement on the budget, worth $120 billion a year, was seen as an important test of the ability of the European Union to show that its members still can work together after major political setbacks in recent weeks.
Voters in France and the Netherlands soundly rejected the union's vaunted constitution, an elaborate document meant to streamline the EU's decision-making system and consolidate its influence on the world stage. Instead, the leaders found themselves forced on the first day of their summit to abandon the goal of continent-wide approval of the document by 2006.
The most acrimonious point involved Britain and France.
All the other countries represented opposed British Prime Minister Tony Blair's insistence on clinging to the rebate his country receives. Under an agreement reached two decades ago, when Britain was a poorer partner, the EU refunds to London an amount now worth nearly $6 billion a year.
Blair said he would consider reducing the rebate only if agricultural subsidies, which account for nearly half the EU budget and which benefit France disproportionately, were overhauled.
French Prime Minister Jacques Chirac refused to consider the suggestion, and on this point the talks collapsed.
But that wasn't the only battle.
Spain and Italy objected to proposals by the EU executive committee to take away funds designated for their impoverished southern regions, redirecting that money to poor, mostly eastern bloc countries that joined the EU last year.
Sweden and the Netherlands, the highest per-capita contributor to the EU budget, demanded their tithes be reduced. Other countries disagreed on the sizes of caps that should be put on EU spending.