Sunday, February 13, 2005

Thinking the unthinkable

Support for co-financing farm subsidies in the future is growing. Under such an arrangement member states would bear a proportion of the subsidies to their own farmers. The context is the demand by the EU's six leading paymasters that the budget from 2006 to 2013 should be capped at one per cent of gross national income. Any such deal would unstitch the 2002 agreement on farm spending and would also represent a further renationalisation of the CAP.

The plan has received unexpected support from Italy's prime minister Silvio Berlusconoi. This may just be a ploy to split the countries that want to restrain the budget.

However, there is also support in the European Parliament. MEPs argue that if member states are not to pay a share of the subsidies, farmers in the 25 member states will lose out when Romania and Bulgaria join the EU in 2007. Dutch Liberal Democrat Jan Mulder has advocated co-financing since 1999. 'It would put the agricultural budget in line with other parts. We have co-financing in rural development, in structural funds, in foreign policy: we should also have it in agricultural policy.' But he insists that topping up by member states should be made compulsory, not optional, so that farmers get parity of treatment.

The new member states are likely to reject the suggestion giving that their payments are being phased in up to 2013. Mulder argues that the poorer states could get a higher percentage from Brussels, but that proposal would be unlikely to attract support from the richer states. However, a budgetary crunch does look likely after 2006 and some change is going to be necessary.

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