Lamont's questions anger EC ministers

THE Chancellor, Norman Lamont, was yesterday accused by some of his European counterparts of taking back to square one the Community's dispute over a planned 30 per cent increase in its pounds 46bn annual budget.

It was the first important meeting since Britain assumed the EC presidency, and all sides knew it would be dominated by fears of a rise in German interest rates later this week. The Chancellor wrote last week to his fellow finance ministers to ask where each government stood on the budget row.

British officials insisted that a list of 85 detailed questions on the budget was intended for officials with the details. 'It wasn't for the ministers themselves,' said a British official. 'To make them concentrate on the 85 questions would be like making them go back to school.'

The list was greeted with scorn by other delegations. One angry EC diplomat said: 'We're totally against it. If you start with 85 questions about something that has already been discussed for six months, that implies rather little regard for the work that has already been done.'

The British tack of trying to make the ministers subject Jacques Delors' budget proposals to detailed scrutiny was received with predictable hostility by Greece, Ireland, Spain and Portugal, the four countries that stand to benefit most from a sharp increase in the EC's budget.

It attracted unexpected opposition from Italy, which had been supportive of British calls for budgetary rigour. 'We don't want the Delors package,' said an Italian diplomat last night, 'but we do want an increase in the EC budget all the same. We're dead against the British methods.'

Mr Lamont maintained last night that he was doing no more than following his instructions from the Lisbon summit and trying to build on Portuguese compromises over the EC's foreign affairs and agriculture spending. But he appeared to be using his chairmanship of the finance ministers' meetings to apply old-fashioned Whitehall disciplines to the Brussels budgetary process.

By bringing the finance ministers into the discussion, rather than allowing the EC's more generous foreign ministers to make all the running, Britain is trying to add structure and economic rigour to a debate that has so far been largely political. Among the loaded questions for member states was whether they would be willing to see a higher increase in the EC's budget than in their own national budgets.

The British argue that there is no need to increase the ceiling on the EC's budget from 1.2 per cent to 1.37 per cent of the combined gross national product of its 12 countries: new money can be found by cuts in areas where funds are now being wasted.

Underlying the British view is a willingness to see the negotiations drag on for several months. 'We won't be in deal-making mode until mid-October,' said a British source. Other officials in Brussels, however, warned last night that the strategy might backfire because the admission of new members to the EC - one of Britain's priorities - cannot begin until the budget row is settled.

BRUSSELS (Reuter) - The EC agreed yesterday to lend Russia up to 150m ecu ( pounds 104m) for emergency medical supplies. The aid was agreed last year but held up by Moscow's refusal to waive its immunity from court action over any repayment problems. Separately, a 130m ecu credit agreement was signed with Ukraine.