Hollow compromise for a good cause

Hollow compromise for a good cause

At their Brussels summit last week, EU members endorsed a compromise on the financial package for enlargement, thus approving the EU’s negotiating position for the final leg of accession talks with ten candidate countries. The timetable for enlargement, which foresees accession by mid-2004, should now be secured. Now, the elements of the financial package – agricultural policy, regional aid, budgetary compensation – have to be negotiated with the accession countries in the six weeks running up to the EU summit (end of Danish presidency) at the beginning of December. However, there is going to be little bargaining leeway left for the candidates since the differing interests of the present EU members made it difficult enough to arrive at a common position.

In substance, the EU reached a hollow compromise with respect to agricultural policy. The ceiling on farm spending is based on the limits agreed in Berlin in 1999. They are substantially higher than the actual farm spending on direct income subsidies and market support. The gap could amount to EUR 2.5 bn in 2003. According to that deal farm expenditure could rise to EUR 49 bn in 2013, the end of the next budgetary period, instead of the EUR 40 bn at which Germany and other net payers were aiming. In addition, the agriculture budget shall be increased by 1% p.a. after 2006 (equivalent to EUR 600 m p.a.). Finally, this ceiling only applies to direct income subsidies and market support and does not include support for rural development, which according to the European Commission shall be increased in the coming years and will reach EUR 7 bn as soon as 2006. Thus, none of the economically reasonable elements, such as a phasing-in of income subsidies in the candidate countries and a concurrent phasing-out of this support in the old EU members, have been considered. Instead, all subsidy regimes of the costly and inefficient agricultural policy have been kept alive.

This farm deal does not help to re-orient funds and means to the needs of an enlarged Union that wants to become the most dynamic region in the world by 2010 and to assume the role of an influential actor of foreign and security policy on the world stage. In order to avoid jeopardising the historic enlargement project, Germany has again relented to the particular interests of the French and – together with other net contributors – granted a “credit line” for the future of the EU. This can hardly serve as proof of the functioning of German-French friendship. Given all the political and economic aspects at stake if enlargement were to be considerably delayed, though, this decision was the only one possible.

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