Pay us what we want or we may not join, Poland warns

European Union Summit: Blair is told he must surrender £1.9bn rebate to poorer new member states 'because Britain is a rich country'

Britain faces a demand from Poland to surrender the €3bn(£1.9bn)-a-year rebate on its contributions to the European Union to pave the way for the EU's historic expansion.

As the summit of leaders begins today in Copenhagen, Poland has warned it might not join the EU if its financial demands are not met. Jaroslaw Kalinowski, its powerful Farm Minister, said: "You cannot describe recent relations between Poland and the EU as negotiations. I think the Commission is trying to force Poland to surrender totally to its demands. I gave the [Polish] cabinet certain negotiating minimums. If they are breached I will have to say 'no' to European integration."

The summit meeting is to approve plans for 10 countries, including Poland, to join the EU in May 2004. But it is going to be overshadowed by hard bargaining over cash with five or six of the applicant states, led by the Poles.

Tony Blair has been warned Poland may raise the stakes by demanding that extra money for potential members be found from the British rebate, saying that as a "rich" country it should help poorer new members. He has seen off other attacks on the rebate, which was won by Margaret Thatcher. But such a move by Poland could pose a dilemma, either surrendering the rebate or blocking the EU's enlargement, which Britain has championed.

The Polish plan could also revive the row between Mr Blair and Jacques Chirac, the French President, which broke out at the last EU summit in October. Herve Gaymard, the French Agriculture Minister, warned afterwards that Britain would have to accept a reduction in the rebate on its EU contributions to allow the bloc to admit the 10 new members.

Negotiations with the 10 will decide how much each new country will gain in subsidies from Brussels between 2004-06, and what their contributions to the EU budget will be.

Under the complex formula for the funding of the EU, each member state must make a contribution to the UK's budget rebate, which is designed to compensate it for its low level of farm subsidies.

Poland, by far the largest of the member states to join the EU, is supposed to contribute €232m towards the UK rebate in 2004, €236m in 2005 and €246m in 2006. The contribution is politically sensitive in Poland where the government is under fierce internal pressure from public opinion to improve the EU deal. Although the total package of subsidies being offered to the 10 new countries is worth about €40bn between 2004-06, Poland will make a net gain of less than €1bn in 2004, rising to nearly €2.7bn in 2006.

The UK's right to a rebate is enshrined in EU law until 2006 but, if a row over Poland's contribution proves a stumbling block, the UK could find itself in the uncomfortable position of obstructing EU enlargement. Britain says its net contribution to the EU has been almost three times that of France. Between 1995 and 2001 the UK was the second-largest net contributor to the EU.