Germany, Britain and the Netherlands - the biggest net contributors to the European Union's budget - locked arms with Sweden over the principle of direct subsidies to Eastern European farmers.
But all 15 EU member states agreed to instruct their ambassadors in Brussels to hammer out a compromise by June 12 that the foreign ministers could approve when they meet next week.
That could mean the issue would be cleared up in time for the June 21-22 summit of EU heads of state and government in Seville, and before Denmark takes over the EU helm from July 1.
"Some members have problems, but we hope these can be resolved soon," Spanish Foreign Minister Josep Pique told reporters in Luxembourg, where the EU was reviewing enlargement with a dozen candidate countries.
"I do hope that between now and next Monday, we will have found a way to resolve this," Pique said.
Brussels is hoping to wrap up a complex series of accession talks with 10 candidates - including Poland, Hungary, the Czech Republic, Cyprus and the Baltic states - by the end of this year.
That would open the door for them to join the EU as early as the middle of 2004, with laggards Romania and Bulgaria following sometime later.
But for negotiations to proceed, the incumbent EU member states first need to adopt a common position on farm subsidies, which account for nearly half of the EU budget.
Under the Common Agricultural Policy, about 40 billion euros ($38 billion) is paid each year to farmers in the 15 EU member states, with a quarter of the funds going to French producers.
But under a proposal from the European Commission, farmers in new EU member states would get only a quarter of what their counterparts in the incumbent nations receive in subsidies.
That proportion would go up to 100 percent over 10 years, but by then the Common Agricultural Policy is expected to be much less generous as the EU aims to scale back farm aid.
"It's going to be very difficult," one European official said, noting that Germany and the Netherlands in particular were holding fast to their positions.
Pique said that if the issue was not cleared up this month, Denmark would be stuck with the twin burden of resolving the question while completing the farming chapter of the accession talks.
In a statement at the June 10 meeting, British Minister for European Affairs Peter Hain argued it was not necessary to hold up talks on agriculture on account of the direct subsidies issue.
"Britain is a champion of enlargement," he said, adding however that postponing a decision on direct payments until later this year would improve the chances for agreement while enabling the EU to stick to its enlargement timetable.
Candidate nations expressed regret over the EU's failure to reach an agreement.
"Any deviation from the road map would actually postpone the enlargement or make the enlargement even more difficult," said Slovenian Foreign Minister Dimitrij Rupel. "If there is a delay it would not be our fault."
But his Polish counterpart, Wlodzimierz Cimoszewicz, said he saw "no real reason to forecast such a development," but said "if that happened, that would be a failure for all of us, the member states and the applicants."
He also reiterated Poland's demand to see "equal treatment" for farmers from candidate nations.
Rupel also said he believed that the European Commission proposals would reappear in October, after elections in Germany. "Maybe we can catch up" when Denmark takes over the EU presidency in July, he said.
While regretting the absence of an accord, Hungarian chief negotiator Endre Juhasz said "there will be plenty of time until the Copenhagen summit. It is clear that by October, we must make progress in other areas."
Cypriot Foreign Minister Ioannis Kasoulides said he hoped "that at the latest at the European summit in Brussels, this thing will be sorted out."
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