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EU: Member States Said To Be Deadlocked Over Enlargement Farm Deal

Just three weeks before the European Union's Seville summit, member states remain deeply divided over what farm subsidies the new members should receive after enlargement. At last December's Laeken summit, EU leaders committed themselves to agreeing to a common position by the end of June. A number of net payers - those member states that pay more into the EU budget than they receive - now argue that rather than offer the EU candidate members farm subsidies, the EU should first cut agricultural expenditures.

Brussels, 30 May 2002 (RFE/RL) -- EU member states have repeatedly promised to keep enlargement talks separate from any reforms of European Union policies. Despite this, decisions on financing the accession of up to 10 applicants in 2004 are in danger of being held hostage to a renegotiation of EU agricultural policies.

EU diplomats -- who request anonymity -- say a number of bigger "net contributors" to the EU budget refuse to endorse a proposal made by the European Commission in January to offer the new member states 25 percent of current EU subsidies -- known as direct payments -- in 2004. This would reach 100 percent in 2013. The objectors are understood to include Germany, Britain, the Netherlands, and Sweden.

All four are intent on cutting costs. Agricultural expenditure amounts to half of the EU's annual 100 billion-euro budget. After enlargement, the budget -- together with agricultural expenditure -- is expected to grow significantly.

EU diplomats say the four are resisting attempts by Spain, which currently holds the EU presidency, to honor an agreement reached last year among members to have a common position on agriculture in place by the end of June.

According to the sources, the four want to postpone a decision on what direct payments to offer the candidates. Although no formal link with other issues has been cited at confidential negotiations, it appears clear that the four net contributors would first like to undertake a review of the EU's agricultural policies, scheduled for the second half of this year.

At issue here, EU diplomats say, is the legal status of direct subsidies. Germany, Britain, and the two other countries claim the subsidies are not part of EU law and should be phased out. By extension, candidates would legally not be entitled to any subsidies at all.

The argument appears to transcend divisions between old and new members, centering on the divide between those in the EU who pay more than they get and those who receive in subsidies more than they pay. This explains why France, for example, being the largest single recipient of EU agricultural aid, is a staunch supporter of the commission offer to give the candidates 25 percent of EU subsidies in 2004.

EU diplomats say Spain is keen to resolve the issue before the end of its presidency on 30 June and will take it to the Seville summit if necessary. Spain has made a number of compromise proposals, including a suggestion to "adjust" the commission offer downwards at a later stage. Germany and Britain, together with the other objectors, have turned the proposal down, presumably because it does not address their chief objective -- to abolish direct payments altogether. Spain is said to be unwilling to prepare a common position without any reference to subsidies.

The spat is unlikely to have any immediate effect on the speed of enlargement talks, as observers and officials in Brussels agree that no substantive decisions on financing the enlargement can be taken before the German elections in September.

However, the threat of a further reduction -- if not complete withdrawal -- of initially promised subsidies is unlikely to go down well in candidate countries.

Poland -- which has the largest agricultural sector among the candidates -- has repeatedly warned that even the 25 percent level offered by the commission in January is not enough. In an interview with the "Financial Times" published today, Polish Prime Minister Leszek Miller urges the EU to be more generous with entry conditions, warning of weakening support for EU membership in his country.