Spain steps up cash battle

Date: 09/04/1998

By Tim Jones

SPAIN has delivered a stark warning to the EU that it will continue to block multi-billion-ecu spending plans until threats to southern Europe's special regional funding schemes are lifted.

Madrid's implacable opposition to using the expansion of the Union eastwards as a lever to cut spending in southern member states makes the European Commission's aim of a deal on the EU's 2000-06 budgetary guidelines at this December's summit in Vienna look highly optimistic.

"If they don't have to reach a deal until 31 December 1999, why would they do it before?" said Javier Elorza, the long-serving Spanish ambassador to the EU, who expects no deal before the Helsinki summit at the end of next year.

In an interview with European Voice, the ambassador condemned those member states seeking radical pre-enlargement reform. "The British and the Dutch, for example, want to squeeze financing and change existing policies. We reject that absolutely," he said. "They are trying to use enlargement as a tool to reform the Union and, to us, that is anathema. We will never accept it."

Spain blocked adoption of the 14-billion-ecu Fifth Framework Research Programme for 1998-2002 for months until it received assurances that final clearance of funds after 2000 would depend on agreement on a new overall budgetary package. "We got our message across: if you say 'no' to this, then we will say 'no' to that," he said.

Recent Spanish tactics have prompted suggestions that Spain has replaced the UK as the EU's new 'bad boy' - a label that Elorza rejects.

"The opposite is the truth," he said. "We are paying a high price for defending the Community that Jacques Delors left us. Some countries are opposing the continuation of certain common policies after 1999 - countries like the UK, the Netherlands, Sweden or Austria - bringing into question things which are well-grounded in the treaty."

Last month, the Commission unveiled details of its Agenda 2000 reform package, designed to ready the Union for enlargement to central and eastern Europe. This proposes setting aside an overall 45 billion ecu of regional aid and an annual 500 million ecu of farm subsidies to prepare the applicants for membership. The existing ceiling on direct national transfers to the EU budget would, however, be maintained at 1.27% of gross domestic product for 2000-06.

The cost of accession would instead be met by making the EU's aid programmes for poorer regions and agriculture less generous. The German, Dutch, Swedish and Austrian governments want to cap their overall contributions to the budget, while some have even advocated scrapping the 16-billion-ecu cohesion fund for Spain, Portugal and Ireland since these countries are rich enough to qualify for single currency membership.

Elorza claimed Madrid would be prepared to contribute more to pay for enlargement in line with its existing commitments, which make it liable for around 7% of any increase, but insisted transferring cohesion funding to the East would be unfair.

"If you think you are going to take our cohesion funding and direct it to the East, then we would pay not 7% but 26% while others wouldn't pay a penny," he said.

He believes the premise of Agenda 2000 - that EU structures should be reformed to ease enlargement - is wrong-headed, and he points out that when Spain joined the EU in 1986, it had to accept all the existing rules (the acquis communautaire).

"We will not change a single iota of the acquis to facilitate enlargement," he warned, although he added: "Rejecting 1.27% is not our final position. What we could do is offer these countries transition periods for agriculture and cohesion if they need them. There could be solutions, but they are not on the table now."

Interview with Spain's Ambassador to the EU, Javier Elorza. Spain is opposed to using the EU's eastward enlargement as a lever to reform and cut spending on agricultural and regional policies in the South.