Big EU members gear up for autumn budget battle

Date: 24/07/1997

By Rory Watson and Mark Turner

A SERIES of key ministerial meetings in early September will set the tone for crucial negotiations on the Union's future after this week's initial skirmishing between member states.

In the space of ten days, foreign ministers and their finance and agriculture colleagues will have three separate opportunities to dissect the European Commission's Agenda 2000 programme with its proposals for the Union's enlargement, and policy and budgetary reform.

Various battle lines are already beginning to emerge as the main bankrollers of EU policies try to fashion an effective straitjacket for future Union expenditure and to reduce their own net payments to the annual budget.

The lead is being taken by Germany, which accounts for 25% of the EU's gross domestic product but pays more than half of the Union's net contributions while countries such as Luxembourg and Denmark, which have higher per capita GDP, are net beneficiaries.

"Germany's net contributions have got out of proportion in the last few years. The aim is a fairer distribution of the burden among the EU member states," said Foreign Minister Klaus Kinkel.

German criticism of the existing arrangements is shared by the Netherlands, the largest per capita net contributor to Union expenditure, which took almost four years to ratify the raising of the spending ceiling to 1.27% of gross domestic product as agreed by EU leaders in 1992.

The emphasis on budgetary rigour is endorsed by the UK, which has repeatedly singled out reforms to the Common Agricultural Policy as an essential element in any strategy for sound financial management.

But the chances of fundamental CAP reforms were not helped this week when EU farm ministers attacked Commission plans for significant cuts in dairy and cereal prices. "The mood was very negative. Only the British expressed any real support," admitted one participant.

In the opposite budgetary camp to the UK, Germany and the Netherlands stand countries such as Spain, opposed to any cuts in the current volume of funds flowing to existing member states, and France, fearful of the impact of CAP reform on a key sector of French society.

While foreign ministers, who will meet on 15 and 16 September, are determined to keep a central hold on the Agenda 2000 programme, they accept that their agriculture and finance colleagues will have key roles in the debate.

The former will begin their detailed assessment of Agenda 2000 at a three-day informal meeting beginning on 7 September and the latter at another three-day gathering opening a week later.

While the policy and budgetary reform talks are likely to run well into next year, foreign ministers must agree on the strategy for the accession negotiations before December's EU summit.

Denmark, Italy and Sweden launched an early bid this week to ensure that all applicants are involved in the opening of accession negotiations.

"We must ensure that no obvious differentiation is established, because of the effect that this would have on their [the applicants'] process towards democratisation and the liberalisation of their economies," insisted Italian Foreign Minister Lamberto Dini.

In contrast, Germany, supported by Austria, backed a step-by-step approach, endorsing Commission calls to open talks next year with only six of the 11 applicants.