EU concerned about France, Germany row

A top European Union official said Oct. 21 that he was concerned that Germany and France might not be able to resolve their dispute over EU farm subsidies, which could delay the union's plans for enlargement.

"I hope that a compromise can be found," European Enlargement Commissioner Guenter Verhuegen told Westdeutsche Rundfunk radio. "I'm not sure one will be though. There are still many uncertainties" about what agricultural aid will be offered to the 10 new members expected to join the EU, he said.

Verhuegen urged Berlin and Paris to commit themselves to cutting EU farm spending from 2006 "to address an increase in spending" that would accompany enlargement.

The 15-nation EU is expected to expand to 25 member states in 2004.

Many of the new states are farm-dependent, and Germany is refusing to back direct aid payments to their farmers unless progress is made on reforming the Common Agricultural Policy, which eats up nearly half of the EU budget.

France - whose farmers are the CAP's main beneficiary - fiercely opposes reforms proposed by the European Commission, the EU's executive arm.

The commission would like to see flat payments to farmers rather than subsidies linked to their production, which critics argue have led to a monumental waste of both food and money.

EU representatives meet in Brussels on Oct. 24 to discuss financing the planned enlargement.

Earlier on Oct.21, Verheugen criticized France for its reluctance to accept a lowering of the CAP, as the system of farm subsidies is officially known.

Noting that agricultural spending in the EU was spiraling and had to be lowered, he said: "And that is exactly the problem. The French have up until now shown themselves to be hardly willing to move in that direction."

"Generally we have to lower EU spending to cover extra spending created by enlargement," he told ARD public television.

"Where we cut is not the important question for me. But, it is reasonably obvious to say that the biggest increase has been in agricultural spending."

The results were proforma and exclude a number of exceptional items, notably a 4.2 billion kroner (460 million euros) charge for Ericsson's restructuring drive, which is to cost a total of 17.5 billion kroner.

Earlier, Ericsson's results prompted profit taking across Europe last week, with the Pan-euro zone Euro Stoxx 50 index falling as investors opted to latch on to the grim news from Sweden, rather than encouraging results from North American companies.

Ericsson's performance depressed the company's shares for most of the session and weighed on technology stocks elsewhere in Europe only a day after Finland's Nokia injected a glimmer of optimism into the telecom sector with a surprisingly good set of third-quarter results last week.