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Poland's Prime Minister Beata Szydlo holds a news conference at the end of a European Union leaders summit in Brussels, Belgium, March 10, 2017. REUTERS/Yves Herman

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By Gabriela Baczynska

BRUSSELS (Reuters) - Poland will not be blackmailed by Western Europeans threatening to take away millions in European Union funds for standing up for its interests, Prime Minister Beata Szydlo said on Friday, a day after Warsaw was badly defeated over who chairs EU summits.

On Thursday, Szydlo was the only one of 28 EU leaders to fight against the re-appointment of Donald Tusk, a former Polish prime minister, as the chairman of their meetings.

She retaliated by refusing to endorse a joint statement of the summit, saying the EU had failed to respect the will of one of its member states.

Diplomats said French President Francois Hollande and German Chancellor Angela Merkel confronted Szydlo over Thursday dinner, with the French leader saying it was the wealthier Westerners who contribute funds for Poland's development.

"If EU politicians think they can blackmail countries by telling them some money would be taken away from them, the EU has very bad prospects ahead," Szydlo told a news conference, confirming the emotional exchange.

Her comments highlight how difficult it can be to achieve unity in the bloc, just as it tries to close its ranks after Britain's decision to leave the EU, an unprecedented setback.

The talk of a multi-speed Europe has intensified in recent months. Western leaders increasingly see the way forward for the EU as fostering more cooperation among the willing and leaving the reluctant behind.

The 27 remaining EU states are now preparing a joint declaration to mark later this month the 60th anniversary of a founding treaty of the bloc. But agreeing a joint text is proving difficult.

Germany, France and Italy are among those who want to push ahead with "enhanced cooperation". But Szydlo said there were red lines for Poland.

"We will never agree to talk of Europe of two speeds ... we will never agree to deny equal opportunities to all member states, a level playing field," she said.

"The countries of our region cannot go on being treated like we have to keep on showing gratitude that we are in the EU... Some politicians in Western Europe feel they can tell us their views and tell us to listen and follow. That won't be the case."

DIVISIONS

Many in the EU are furious with Poland's eurosceptic, nationalist-minded government, which has clashed with other EU states and Brussels over migration, rule of law, climate and energy, among other issues.

They say Warsaw is not only undermining democratic checks and balances in the biggest ex-communist EU member, but also imports its domestic political feuds to the bloc.

Still, some EU leaders on Friday sought to turn the page on the bruising dispute from the previous day. Merkel saying no cuts to Poland's EU subsidies were on the agenda now.

"I am convinced it is just an episode. I see no sense in feeling offended and retreating into a corner, neither for the Poles nor for the others," Austrian Chancellor Christian Kern said of the Polish debacle.

Diplomats said Szydlo was engaged and cooperative during Friday sessions, and the Polish premier said she felt some sympathy from other EU leaders.

But for some EU countries, the Thursday spat only served to prove that the EU should allow coalitions of the willing to go ahead in fostering closer ties on areas they can agree on, without being blocked by those opposed.

"The lesson for the future is that we have to avoid at all cost a situation in which one country could have veto over everyone else," a senior diplomat in Brussels said. "The enhanced cooperation, the multi-speed Europe ... is the only answer, the only way forward."

(Additional reporting by Andreas Rinke, Writing by Gabriela Baczynska; Editing by Larry King)

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