The Taoiseach, Bertie Ahern, has joined other European leaders in Brussels for a two-day summit to try to reach a deal on the European Union's next seven-year budget.
The summit has been overshadowed by the failure to reach a deal.
British Prime Minister Tony Blair warned this afternoon that an EU budget deal was hanging 'in the balance', predicting tough negotiations ahead.
But Mr Blair, who holds the European Union's presidency, underlined the need to agree the 2007-2013 budget for the sake of the bloc's poorer newcomers, who are desperate for a deal to release much-needed funds.
'It's going to be very tough, very difficult,' he said as he arrived to chair the two-day summit. 'It's just as well to be frank about that right at the outset: it hangs very much in the balance.'
Britain's efforts so far to broker a deal have been fiercely attacked, with France and Poland leading the front against London's latest proposals to end the standoff.
Writing to Britain's Financial Times daily, their foreign ministers warned that the offer 'cannot become the basis of an agreement'.
They urged London to pay more of the costs of last year's enlargement to the ten new mainly ex-communist countries of eastern and central Europe, notably by giving up more of its cherished rebate.
After arriving, Blair went into head-to-head talks with French President Jacques Chirac, in a bid to narrow the differences at the heart of the budget standoff: specifically London's demands to reform the EU's farm aid system.
Despite an offer to lop €8 million off the cashback, London has so far resisted resounding calls for a greater sacrifice.
Britain's proposed budget of €849.3 billion is slightly up on a first offer last week, mainly by reinstating some development funding to new members which it had earlier planned to cut.
But the latest proposed package makes little change to the disputed rebate, negotiated 20 years ago and which last year amounted to more than €5 billion.
Mr Blair is proposing to limit the rebate to €7 billion a year, which effectively means giving up €8 billion in total from 2007 to 2013, but that is not enough for many of his partners.
However, there are other sweeteners in there as well.
Ireland would receive rural development money to the tune of €250 million and there are pay-offs too for Sweden, Spain and the Netherlands, three countries who joined Britain in blocking a budget deal last June.
The price of failure is the strongest possible incentive to get a deal over the next two days, as the leaders know that a second failure to approve the next budget will do little for the EU’s credibility nor will it make getting agreement next year any easier.
