- guardian.co.uk, Tuesday 15 May 2001 08.30 BST
Diplomats reported angry exchanges as ministers discussed demands by Germany and Austria for a seven-year transition period before workers from countries like Poland and Hungary can move freely within the EU.
Spain insisted it could only back a deal on the labour issue if it won iron-clad guarantees that it would continue receiving generous amounts of regional aid after enlargement.
EU regional aid is distributed on the basis of a country's relative wealth. Less wealthy areas qualify for handouts if their incomes are less than 75% of the union's gross national product. So when the east European countries join, many Spanish regions now getting such aid will move above that threshold.
Anna Lindh, foreign minister of Sweden and current holder of the EU presidency, was said to be furious, telling her Spanish counterpart that his position was "unacceptable and not playing by the rules".
Under community law a citizen of any EU member state is free to get a job anywhere in the 15-country union on terms equal to those enjoyed by locals.
But Germany and Austria, on the frontline of the biggest enlargement in EU history, fear being swamped by cheap labour if that right of free movement is extended immediately to the poorer new member states to their east.
Ten east European countries, plus Cyprus and Malta, are applying to join the EU, but a sense of crisis over the process has mounted as the candidates have complained of shifting goalposts, missed deadlines, and the rise of eurosceptic opinion even before they have joined the club.
Poland had long insisted it would be ready to join in 2003, but no newcomers are now expected in before 2004, and the big question is whether the first wave can even include Poland, the largest candidate.
Spain was still insisting last night on directly linking its right to "structural funds" - EU money transferred from richer member states to help develop poorer ones - to the labour question.
Spain's foreign minister, Josep Pique, said Madrid would not yield on a deal that guarantees 42.9bn euros (£26.5bn) euros in the 2000-2006 period.
Mr Pique said he was willing to compromise, but insisted that the negotiations could not be concluded until his government's concerns about future aid were satisfied.
But the German foreign minister, Joschka Fischer, said he was in no mood to make future funding guarantees. "We cannot link things that do not go together," he said.
Benita Ferrero-Waldner, his Austrian counterpart, accused Spain of jeopardising the EU's plans for eastward expansion.
Spain is expected to come under pressure to change tack before the Gothenburg summit next month, with every other government now prepared to back a compromise proposal by the European commission for a seven-year waiting period with reviews after two and five years.
Even if this issue is resolved, trouble lies ahead over the even knottier question of farm subsidies, a hugely expensive item for Poland, with a large and underproductive agricultural sector. Then France is likely to be the bad guy, blocking progress to protect its own interests.
