Why no capping?

George Monibot complains in The Guardian about the absence of capping or degressivity in the CAP reform deal: Monibot

The reason Britain and Germany opposed these proposals is that they have a lot of large farmers and agreeing to capping would disadvantage them and cut national receipts from the CAP. The more fundamental issue is whether the CAP is there to support the global competitiveness of EU agriculture or is meant to be a social policy for marginal farmers.

France and Germany do their deal

Long-term observers of the CAP know that any agreement between France and Germany can often shape the direction of the reform process. Even with many more member states, this still remains true. Earlier this week the two countries issued a joint statement calling for a freeze at 2013 levels in nominal terms Agreement

Calls for a nominal freeze in the budget, which will still mean a decline in real terms, have been growing in recent months and around half of governments voiced their support for the Commission plan at a General Affairs Council late last month.

The country’s two agriculture ministers – France’s Stéphane Le Foll (rather superior and disdainful in a typical French mode) and German counterpart Ilse Aigner – came to the agreement after meeting in Berlin. They cited the 'importance of the CAP for growth, employment and the environment and innovation in rural areas along with Europe's role in ensuring food security worldwide', in their statement. In other words, the traditional rather general but fine sounding justifications of a dysfunctional policy.

Their rejection of any reduction in Pillar One allocations was also notable taking into consideration the fact that Germany is the biggest contributor to EU funds, while France is the biggest beneficiary of direct aid payments. Germany and France join the likes of Austria, Belgium, Finland, Greece, Ireland, Luxembourg, Malta, Portugal, Romania and Spain in opposing cuts, leaving member states such as the UK, Netherlands and Sweden seeking a more austere budget with a reduced prospect of success.

Of course, British prime minister Dave Cameron is under heavy pressure from within his own party to take a tough line in budget negotiations. Indeed, Dave is no fan of the EU and reflects the traditional British distaste for the CAP in particular. Vetoing the budget would go down well at home, but it would also mean that the EU would revert to annual budgets determined by qualified majority voting, reduced the influence of Britain and its allies.

Meanwhile for an authoritative account of tensions between member states and the European Parliament over the CAP, this blog post by Christilla Roderer-Rynning is recommended: Parliament

Has a grand deal been done?

The future of the Common Agricultural Policy depends on what is decided about the EU budget. And the broad shape of the EU budget is usually decided in grand deals between the leading countries of Europe. Indeed, in the past, the future of the CAP has effectively been decided over lunch between French and German ministers. However, in a larger EU, that is not as simple, although the Franco-German axis is still very strong.

However, this time it looks as if a grand deal may have been done between Britain, France and Germany. David Cameron has been quite an effective negotiator in Europe and for understandable reasons he wants the EU budget frozen in real terms. It's very difficult to inflict misery at home when there is apparent profligacy in Brussels (a lesson that the European Parliament seems slow to learn).

Britain is denying it, but essentially what seems to have been agreed is that Britain's budget rebate, won by Mrs Thatcher, will stay intact although the original justification for it has been undermined. In return France will be able to keep the CAP more or less unscathed. Germany has already sold the pass, as it usually does, by signing up to a joint declaration with France calling for a strong CAP.

Needless to say, the accession states, and in particular Poland, are furious. They want the budget to be maintained and subsidies to their farmers brought in line with the rest of Europe. To some extent that could be achieved within the current budget envelope, although farmers in other member states would lose out.

There is a lot of hard negotiation to come, but it may be, despite denials, that the basic outlines of a deal have been agreed. If that is so, it will be a disappointment, but not a surprise, for the CAP reform camp.

Alliances and stances over CAP reform

The process of CAP reform is always marked by informal alignments or alliances between member states and there seems to be something of a rapprochement between Britain and Poland: Poland

Both countries support a shift of spending from pillar one (direct payments to farmers) to pillar two (more public goods oriented). However, the UK wants pillar one to be phased out, while Poland wants an equal split between the two pillars.

The two countries agree in principle that subsidies for farmers in older member states and the accession states must be equalised, a key agenda item for East European countries. However, Britain doubts whether it will be possible to go as far as a flat rate.

However, in a different alignment, Austria is backing France and Germany in calls for a strong farm budget, but opposes Warsaw's idea of a fixed rate of subsidies. France is confident that its stance is gaining broad support and that the CAP budget can be retained at around the current level: France