Funding deal starts countdown to enlargement

  • 2002-10-31
  • Tanya Willmer
The European Union began the final countdown to the creation of a united Europe with a deal on funding its expansion into the former Communist east under its belt but facing weeks of intensive negotiations with candidate states.

The agreement struck last week after two days of heated wrangling over money at an EU summit in Brussels removed the last major obstacle to the 15-nation bloc's biggest ever enlargement, set for 2004.

EU leaders endorsed the 42-billion-euro package after heavyweight members France and Germany agreed a compromise to their long-standing dispute over the farm subsidies bill.

But while members and candidate states alike hailed the accord, critics lamented that it had put off much-needed reform of the EU's farm subsidy system, the Common Agricultural Policy, or CAP.

Denmark, which holds the rotating EU presidency, presented the package to the 10 candidate countries at a meeting in Copenhagen Oct. 28 (see story below).

In addition to the three Baltic states, Cyprus, the Czech Republic, Hungary, Malta, Poland, Slovakia and Slovenia expect to join the EU by 2004.

With many of them facing referendums over the next year on accession, the farm-intensive candidate states are expected to hold out for better terms for their farmers to convince a lukewarm public of the benefits of EU membership.

In progress reports on the candidate countries last month the EU's executive arm, the European Commission, said they still had work to do to overhauling creaking Communist-era bureaucracies and fighting corruption.

"There's no doubt these negotiations will still be very complicated. But this agreement gives us a solid basis to go forward," said EC president Romano Prodi.

French President Jacques Chirac and German Chancellor Gerhard Schroeder set the stage for the funding deal when they reached a surprise compromise on farm aid, which eats up nearly half the EU's current annual budget of 95 billion euros.

The deal limits the rise in the farm budget to one percent from 2007 to 2012.

But it also effectively delays any major overhaul of CAP, infuriating members such as Britain and the Netherlands, which fear this could cripple the Union financially when it expands to 25 members.

Under the terms of the financing package, farm subsidies for newcomers will be phased in from 2004, gradually increasing from an initial 25 percent of the allocation for current member states to 100 percent in 2013.

Latvia spoke for several candidates when it too voiced reservations.

"If there is an agreement ... that facilitates further development... But in any case all this unequal treatment of farmers will be unfair," said Martins Roze, director of EU integration at Latvia's Agriculture Ministry.