Global Policy Forum

by Thomas Fuller

Vowing to "do everything" to ensure the success of the European Union's plans to admit 10 new members, the leaders of Germany and France announced an unexpected deal Thursday to limit spending on the Union's massive farm program, a key sticking point in the plans to enlarge the 15-member bloc.

Meeting several hours before the official start of a summit meeting of EU leaders, President Jacques Chirac of France and Chancellor Gerhard Schroeder of Germany said they had agreed to put a ceiling on farm spending beginning in 2007. They also said subsidies to farmers in the new Eastern European members would be phased in from 2004.

A deal on the EU's farm policies is considered a prerequisite to the Union's enlargement because leaders must agree on the future of the program before deciding how much money to offer farmers in the 10 countries applying to join. Farm spending will be one of the most costly aspects of expansion, in part because Poland, one of the candidates applying to join the bloc, has more farmers than France and Germany combined.

"France and Germany have an interest in the European Union's expansion to the East, and will do everything to ensure that this historic chance shouldn't be missed," Schroeder said. Officials cautioned that details of the deal were not clear late Thursday - and that agreement would have to be reached by all 15 members, not just Germany and France. Nonetheless, the breakthrough between Chirac and Schroeder is crucial because France is the biggest recipient of farm aid and Germany is the biggest net contributor to the budget.

The EU's farm program is both costly to taxpayers - it makes up about half of the Union's E98 billion ($95.7 billion) budget - and to consumers: through a series of tariffs and quotas it raises the price of food in the Union by 45 percent. Although ministers and officials in Brussels welcomed the breakthrough between the continent's two heavyweights, it is likely to be criticized by the EU's smaller countries, which resent that deals are struck away from official meetings. Chirac and Schroeder met at a Brussels hotel just as other top government officials were arriving at the official venue across town. "The construction of Europe has always been a coordinated effort between France and Germany," Chirac said in the hotel lobby.

Anders Fogh Rasmussen, the prime minister of Denmark, which holds the Union's rotating presidency, said, "Of course it's progress that two major countries have reached agreement on a certain issue." But, he added: "The European Union is a Union of 15." Rasmussen made an impassioned plea for a successful conclusion of the summit meeting, saying that he was "prepared to stay" in Brussels beyond Friday if necessary. The leaders must decide three main issues at the summit meeting: what level of subsidies to offer Eastern European farmers, how much money to provide the prospective members for infrastructure spending and how much "compensation" to offer the wealthier candidates who risk being net payers into the Union's budget from the first year of accession. Four countries - Germany, the Netherlands, Sweden and Britain, all of them net payers into the budget - have lobbied to reduce the total amount offered to new members.

Chirac struck back this week by proposing that the Union reconsider the annual "rebate" it offers Britain - a deal struck by Prime Minister Margaret Thatcher in 1984. Such infighting, which has become a familiar feature of EU summit meetings, threatens to delay the Union's expansion, which was first officially proposed a decade ago. Rasmussen attempted to calm the waters Thursday, encouraging leaders to seize the historic opportunity of uniting Europe. "I feel confident that at the end of the day all EU leaders will realize that we are facing a historic moment, we're going to make a historic decision, and this should not be overshadowed by a detailed discussion on budget and agriculture," he said.

Enlargement was relatively cheap, he said citing figures of "E10 to E15 per capita, per year in the present member states." The countries hoping to join in 2004 are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

France Challenges British Rebate

Chirac met Prime Minister Tony Blair on Thursday to discuss the French demand for a review of Britain's EU budget rebate, Agence France-Presse reported from Brussels. "We want to limit expenditure in all areas," Chirac said, "not only in agricultural spending. In this general context we should also examine the problems of compensation which certain countries enjoy, in particular Britain." Asked whether Britain would be open to talks about the rebate in the next round of budget negotiations, a British official said: "The full range of issues will be discussed." Britain's rebate has become a political hot potato, with France demanding that the issue be put on the table.

In another development, the EU's enlargement commissioner, Guenter Verheugen, said he was optimistic that the summit meeting would resolve outstanding disputes over the cost of the move. But Verheugen warned that EU leaders would have to reach a consensus at the Brussels talks in order to give the European Commission - the EU's executive arm - a mandate to negotiate with candidate states ahead of the EU's next summit meeting, in Copenhagen in December, when the bloc is due to extend formal membership invitations to the 10 candidate countries.

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