Baltics stunned as EU plans to slash aid

The European Commission has unveiled plans to delay full regional and agricultural aid to its new members by a decade. The set of proposals has been greeted with dismay by EU candidate countries, including the Baltic states.

According to the plan, farmers in the 10 applicant countries will initially receive just 25 percent of subsidies paid to EU member states. Funds would steadily rise over a 10-year transition period.

These are only proposals, and the European Commission - the EU's executive arm - says there is still time to change them. The EU member states have set themselves the target of reaching a common position by the end of the Spanish presidency this June.

But top Baltic officials are angry. Alar Streimann, Estonia's top EU negotiator, said he was going through the commission's plans, which he referred to as "by far not the best."

"I have talked to some of my colleagues, and we are all doing the same thing. We will insist on 100 percent, just like it is in the member states," Streimann said.

Estonian President Arnold Ruutel told the Estonian daily Postimees he considered the proposals unfair.

"It would be wrong in principle, because the candidate countries would not be able to be more competitive with existing EU members," he said. "This 10-year transition period could spell decay for our farming as we would not be able to compete on an equal footing in the food sector."

Vilnius has been slower to protest. But some Lithuanian politicians defending the country's farmers have voiced indignation. They are calling for mass protests jointly organized between the candidate nations.

"The European Commission's proposition is an insult and discrimination against the candidate countries' farmers" said Ramunas Karbauskis, MP for the Peasant Party and New Democracy Union, who is known to be a defender of the interests of Lithuanian farmers.

He slammed the Lithuanian government for being slow to react.

"It's a shame we seem to be defending farmers in the EU. Official Vilnius doesn't care about its own farmers. Lithuania should follow Poland's and Estonia's examples and protest."

The limited aid offer is likely to hit hardest of all in Poland, the largest of the candidate countries with 39 million people. Some 20 percent of the population work in agriculture.

Poland's Agriculture Minister Jaroslaw Kalinowski said in protest to the European Commission's plans that, "Polish farmers will not be second-class citizens in the EU."

But EU Enlargement Commissioner Guenter Verheugen insists the proposals are fair.

"This offer strikes the right balance between the expectations of the candidate countries, who will become full members of the EU, and the budgetary limits of the EU," he said.

And he warned there was little room for bargaining.If their farmers immediately received the same as farmers in poorer EU countries like Spain, for example, it would upset the social balance, said Verheugen. Many urban residents would even be tempted into the countryside if the farmers' incomes radically increased, which would overturn any reforms in the agricultural sector.

The head of the European Commission delegation in Lithuania, Michael Graham, clarified that the EC has proposed to gradually phase in one category of aid, "direct payments," starting at 25 percent of current subsidies to EU member states, and increasing year by year to reach the full amount by 2013.

"The Commission is proposing substantial rural development support for accession countries. From 2004 to 2006, close to 5 billion euros ($4.31 billion) would be made available for rural development policy in new member states," he said.

In Latvia official reaction to the EC proposals was similar to Estonia.

The head of the Latvian Foreign Ministry's EU negotiations secretariat, Eduards Stiprais, said the propositions raise a lot of questions.

"How would the EU's common agricultural policy function if there was a difference in support for old and new EU member states? This is the main question we are asking," he said. "It would make sense the Baltic states cooperate on this question, since we have quite equal agricultural sectors."

Latvia's agricultural sector and rural regions are struggling with little or no support from the state.

Laimdota Straujuma, state secretary at the Agriculture Ministry, said Latvian farmers reacted strongly against the European Commission's proposals.

"It will be difficult for Latvian farmers to compete with farmers in EU member states who receive the full amount," she said. "Only 5 percent to 10 percent of Latvia's farmers could do so even if they had the full amount."

Janis Berzins, chairman of the Vegetable Growers' Association, said the situation for Latvian farmers is already tough with inadequate state subsidies.

"The EC is playing chess with their subsidies as they please," he said. "(The farmers' unions) will meet and discuss these issues further before we decide what to do."

Several of the candidate countries' EU negotiators have expressed a need to cooperate and make a joint stand against the EC proposals.

Latvia's foreign minister, Indulis Berzins, said it could be a good idea for officials from all candidate countries to meet and discuss how to tackle the issue.

Stiprais said, however, that it is too soon to talk of such a forum until they have actually discussed it.

Practical view

Not everyone is so negative about the proposals.

Although the candidate countries would have to wait 10 years before reaching the same level of support farmers in some EU countries already enjoy, the initial offer of 25 percent is still far more than any of the Baltic states can afford to spend propping up agriculture themselves.

In Latvia farmers receive only 15 lats ($24) per hectare of grain crops from the state. A direct payment of 25 percent of EU's agriculture aid would mean around 50 lats extra per hectare.

Lithuanian Prime Minister Algirdas Brazauskas has tried to remind farmers of this.

"More is better, but we have to face reality," Brazauskas said at a press conference on Jan. 31.

He stressed that even with current EC plans, Lithuanian farmers would receive much greater financial support than the Lithuanian state could afford to give. He emphasized that future agricultural funding should be compared against what the country is currently able to provide its farmers.

He pointed out that Lithuania now provides subsidies worth $10 for every hectare of grain crops, but in 2004 with EU support that amount would grow to $31.25.

Petras Austrevicius, Lithua-nia's EU chief negotiator, expressed a similar view, using a Lithuanian proverb. "It is better to have a sparrow in the hand than an elk in the field," he said.