But Mr Berlusconi may yet pay a diplomatic price for the deal because the country holding the presidency of the EU is supposed to play the role of honest broker. One EU diplomat argued yesterday: “I don’t see how the other countries could accept such a situation where the presidency in office takes the biggest element of the deal. It is a scandal of some proportions.”Under the deal, Lille in France gets the EU’s rail safety body, with Lisbon awarded the authority for maritime safety, and Cologne for air safety. Sweden won a centre for the prevention and control of disease and Spain will host one for fisheries..

Germany, Europe’s biggest paymaster, demanded a curb on massive EU subsidies yesterday, just two days after two big potential beneficiaries, Poland and Spain, thwarted German-backed plans for an EU constitution. The effect would be that subsidies to Spain would have to be cut back substantially after 2006, if the Poles are to get significant injections of cash to regenerate their economy.The move will raise the political temperature further after the disastrous weekend summit, in which Spain and Poland blocked a proposed change in the EU’s system of decision-making. Some diplomats saw the initiative as an act of instant revenge.Germany and France both backed the idea of a “pioneer group” of countries forging closer integration together, and had pressed for the constitution to be agreed. Their anger with Poland and Spain was reflected in the timing of yesterday’s letter. Germany has long-warned the Spanish and Polish not to hold up talks on the constitution beyond the end of the year, arguing that they would be more complicated if conducted alongside future financial negotiations.

That was seen as an implicit threat to cut subsidies if the countries did not knuckle under. Britain, Sweden, the Netherlands and Austria joined the initiative in a bid to limit their own financial contributions, although Denmark, another net contributor, decided against signing.The message being sent by Germany is unmistakable. Berlin provides about one fifth of EU funding but is still bearing the costs of reunification. With Poland and nine other, mainly former Communist nations due to join the EU next year, more nations will be left competing for a similar pot of money, if plans for the ceiling go ahead. One diplomat from an acceding country argued: “This sends completely the wrong message.