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EU: Brussels Summit Tackles Financing Enlargement

The European Union's Brussels summit today and tomorrow is being billed by the bloc's current Danish presidency as the last chance to keep enlargement on track. But an EU foreign ministers' meeting in Luxembourg earlier this week concluded that member states are still far from agreement on the financial issues connected to expansion. The Danish presidency has vowed to use strong-arm tactics to extract a compromise in Brussels -- but given the discord within the EU, its powers of persuasion are sure to be put to the test. RFE/RL's European Union correspondent Ahto Lobjakas has followed the preparations for the summit and files this report.

Brussels, 24 October 2002 (RFE/RL) -- In recent years, the EU's six-monthly rotating presidencies have used their limited life cycle to create consensus where none seemed possible. Perhaps the most notable example came during Belgium's presidency late last year, when the small country forced a number of recalcitrant member states to commit themselves to the scheduled 2004 enlargement by 10 candidate countries.

Now another small country, Denmark, is facing an equally daunting task -- forcing an agreement out of the bloc's myriad financial interests before the 2004 timetable falls off track.

Just how difficult that task will be was made clear by Denmark's foreign minister, Per Stig Moeller. Summing up the results of the final preparatory meeting in Luxembourg before the Brussels summit, Moeller admitted EU foreign ministers had failed to agree on any of the financing issues that are crucial to the conclusion of accession talks.

"Now, the European Council [the Brussels summit] has to decide upon the following: the overall allocation for structural funds, the question of agriculture and direct payments to the new member states, and budget compensations [to avoid any of the new members becoming net contributors]."

The key question of post-enlargement farm subsidies -- known as "direct payments" -- was not even debated, apparently to allow Germany, as the biggest net contributor to the EU's agriculture budget, and France, as its biggest beneficiary, time to work it out between themselves.

The German and French leaders will hold a bilateral meeting in Brussels today before the summit starts. But even in the unlikely event that the parties manage to find a way of guaranteeing Germany a reduction in costs after 2006 that is also acceptable to the French farming sector, there's the danger that many of the other member states could refuse to endorse the deal. The problem is that it would be tantamount to recognizing that there is a link between enlargement and agricultural reform -- while officially there is none.

French President Jacques Chirac yesterday further complicated matters, suggesting that Britain -- which benefits from a 5 billion euro annual rebate (a form of budget compensation) -- should also help pay for enlargement by relinquishing the hard-won concession.

A Danish official, wishing to remain anonymous, said the direct payments issue is "very much the central question," with everything else playing a "minor role."

Yet even the "minor items" on the financing agenda involve billions of euros and are hotly contested.

There is agreement among the member states that no new member states should end up a net payer into the EU's budget in 2004. Yet the current EU is divided between cost-conscious countries like Germany, the Netherlands, Sweden and Britain -- who say new members' budgets must be balanced only in terms of 2004 -- and those who say the receipts in 2004 must also exceed those in 2003.

How to achieve either of these objectives is equally unclear. Some member states favor bending EU rules and speeding up grants from the bloc's structural and cohesion funds. Others favor annual lump-sum budget compensation payments. Still others prefer a mixture of the two.

Another unknown in the summit debate is the issue of the so-called "safeguard measures" suggested by the European Commission. These would allow existing members during the first two post-expansion years to block certain new member states from the EU's internal markets if they have yet to fully implement EU laws. Some member states favor longer sanctions, perhaps including the suspension of voting rights in entire policy areas. The Netherlands appears to have tied the issue to approving the admittance of some of the less-prepared candidates, such as Poland.

A Danish official promised yesterday that Denmark would attack the Brussels summit "head-on," threatening to "lock the door" on EU leaders if need be on the evening of October 25th if no agreement is reached. He warned that without a deal in Brussels, the scheduled enlargement is in danger.

Yet it is difficult to see what Denmark can realistically do beyond reiterating standard arguments. The Danish official ended his summit roundup with an appeal to EU member states to "retain a sense of proportion" and recall that the cost of expansion would be only a fraction of the EU's total wealth. And that is a message that EU leaders, arriving today in Brussels, have heard many times before.