EU/BRITAIN: For Tony Blair, the Brussels summit ought to have offered an opportunity to assert his political leadership in Europe after the French and Dutch referendums on the EU constitution.
Instead, he faces the prospect of leaving Brussels today as the scapegoat for a failure to agree on the EU's next seven-year budget.
Britain's refusal to cut its budget rebate, which returns to London two-thirds of its contribution to EU funds each year, has become the biggest obstacle in the way of a deal.
British sources say that Mr Blair is relaxed about the prospect of a collapse in negotiations today, despite the fact that Britain takes over the EU presidency on July 1st.
Negotiated by Margaret Thatcher in 1984, the rebate has attained an almost totemic quality in Britain and Mr Blair will find it difficult to convince his domestic audience of the case for any cut in its value.
He has argued that any change in the rebate should be accompanied by a thorough overhaul of the EU budget, 40 per cent of which is spent on subsidising farmers, who make up just 4 per cent of the EU population.
Some of Mr Blair's advisers fear that failure to agree a budget deal today could undermine Britain's plan to launch a campaign for economic reform in Europe during the next six months.
With weakened leaders in France and Germany, Mr Blair is well placed to assume political leadership in the EU. Continental Europeans remain sceptical, however, about Britain's promise of a new social model based on the values of New Labour.
The divisions in Europe caused by the Iraq war have drifted from public view but they have left a legacy of mistrust that is unlikely to disappear during Britain's EU presidency. Many smaller EU countries have been outraged by Britain's behaviour during the budget negotiations and by Mr Blair's glee over the untimely death of the constitution.
"He danced on the grave too early," one senior EU diplomat said this week.
Mr Blair's friends believe that a budget deal is possible today, although they acknowledge that it would require some nifty language to satisfy the demands of all sides.
If Britain is isolated in opposition to a budget deal, Mr Blair's EU presidency will begin on a sour note that may be impossible to dispel as it progresses.