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East: EU To Deny Candidates Equal Access To Aid Funds For Up To 10 Years After Enlargement

On 30 January, the European Commission will publish the European Union's position on the so-called "money chapters" in enlargement talks. The report will indicate what kind of access candidate countries can expect to enjoy to the EU's agricultural subsidies and regional development aid. EU insiders in Brussels have indicated this access will be incremental and that it will take up to 10 years before the candidates can expect full parity with existing members.

Brussels, 25 January 2002 (RFE/RL) -- When more than half of the Estonian population turned against the European Union last year -- displaying record levels of Euroskepticism among candidate countries -- officials in Tallinn, clearly rattled, resorted to economic arguments.

A favorite simile used was that of a pot of soup. Once the soup is in the pot, it cannot simultaneously be thick at one end and thin at the other. In other words, once in the EU, newly admitted nations would virtually be guaranteed the levels of prosperity observable among the present EU membership.

Yet news from Brussels now firmly indicates that the opposite will be the case for up to 10 years after the candidates join. Well-informed EU sources tell RFE/RL that when the European Commission publishes its report on the costs of enlargement on 30 January, it will suggest relatively long transition periods before new members are allowed equal access to the EU's generous agricultural subsidies and regional development aid.

These support programs currently account for 50 and 30 percent, respectively, of the EU's 100 billion euro ($87 billion) annual budget.

EU sources say candidates can initially expect to receive 25 percent of the direct-subsidy payments that farmers in current EU member countries receive. That percentage will go up slowly during the first five years. Full parity with existing members will be achieved by 2014 -- 10 years after accession. To soften the blow, the EU will offer candidates extra funds for structural support -- to help reform their agricultural sectors and perhaps "pension off " older farmers.

It is highly likely, according to EU sources, that these terms will not differentiate between candidates with relatively small and problem-free farming sectors and larger, more troubled cases like Poland.

The new members also will initially have restricted access to the so-called "structural funds" disbursing regional development subsidies. The Commission is likely to reiterate its already semi-official position that the candidates are incapable of absorbing aid in excess of 4 percent of their annual gross domestic products (GDP). As most candidates' GDPs are very low compared to EU levels -- jointly, they amount to 5-6 percent of the bloc's total -- this means achieving parity with current members will again take a long time.

Delaying the new members' equal access to EU aid beyond the end of the current budgetary cycle in 2006 effectively reduces them to second-rate membership for the next 10 years. In order to conclude accession negotiations, the candidates must now agree to conditions that will tie their hands in the 2005-06 negotiations for the next budgetary period between 2007 and 2013.

The EU's arguments have been well-rehearsed in recent months. Until 2006, the funds available for enlargement are limited by "Agenda 2000," the budgetary compromise clinched at the Berlin summit in 1999. Agenda 2000 assumes six new countries will accede in 2002. It is now likely that 10 countries will join in 2004, so the precise figures remain contested but are likely to fall between 40 and 60 billion euros ($35-52 billion) for all new entrants until 2006.

Importantly, Agenda 2000 makes no provisions for agricultural subsidies for new members, hence the Commission can describe the initial offer of 25 percent of EU levels as a significant concession.

In the longer term, the EU will use three arguments against allowing candidates quick access to full agricultural subsidies.

First, the subsidies were originally conceived to compensate EU farmers for falling prices. Prices in candidate farming sectors continue to go up.

Secondly, EU officials have repeatedly warned that access to full subsidies risks freezing candidates' agriculture sectors into present not-fully-reformed patterns.

Thirdly, EU officials say, inundating the agricultural sector with relatively large amounts of money risks destabilizing the candidates' entire economies.

Behind these arguments lie long-running controversies over funding within the EU itself. Germany, the biggest net contributor to the EU's budget, pays in 10 billion euros ($8.6 billion) more than it gets back. Enlargement will boost Germany's costs in any case, but putting the new members on an equal footing with present aid recipients would make such costs domestically unsustainable, and by extension put the entire enlargement process in danger.

Germany's economy is already close to recession and is running a budget deficit of nearly 3 percent -- the critical limit under the stability pact underpinning the euro.

Germany has long advocated the need to reform the EU's costly aid programs. EU sources say it will attempt to use enlargement as an argument to "renationalize" at least part of the subsidies. If successful, such a move would put a significant part of the aid costs on national governments, automatically limiting the burden on the communal budget.

Assuming that Germany will not pay significantly more for the enlargement, present aid recipients will have to give up some of their communal income. EU sources say it is "unreasonable" to expect France -- the main beneficiary of agricultural aid -- or Spain -- the biggest recipient of regional development funds -- to make the adjustment in just a few years' time.

EU diplomats admit it will be very difficult for candidates to accept a 10-year freeze on full membership rights. But they indicate that, sooner or later, prospective members will face a simple choice: Take it or leave it.

Accession talks have shown before that little in the EU's negotiating positions is actually negotiable. Candidate governments vividly remember a similar choice from 2001, when the EU forced on them seven-year limitations on labor movement after enlargement. EU Enlargement Commissioner Guenter Verheugen then summed up the situation by saying the transition period would not be necessary if the candidates could postpone accession by seven years. This is the time, he said, it would take for the EU -- or mostly Germany, in this case -- to ready itself for the opening of its borders to eastern workers.

It is likely candidates will hear a similar message from Brussels at the end of January.