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EU Subsidy Ruling To Alienate New Members
February 5, 2002
Summary
The European Commission on Jan. 30 released the details of its financial plan to pay for the upcoming 2004 European Union enlargement. The most controversial measure in the proposal is the withholding of full agricultural subsidies from EU applicants until 10 years after membership. This extended timeframe has angered prospective members such as Poland and threatens to hamstring the EU's post-expansion development.
Analysis
The European Commission on Jan. 30 released its plan to phase in agricultural
subsidies to the 10 countries seeking entry into the European Union in 2004. Among
the prospective members are Poland, Hungary, the Czech Republic and Cyprus.
The proposal unleashed a firestorm of opposition among all the applicants, as it would withhold full agricultural subsidies from countries for 10 years after they join the union and would initially giving farmers in current EU states a subsidy level four times greater. The European Commission's blatant favoritism in order to win support for enlargement is sure to alienate new members, particularly agriculture-heavy Poland, which could block EU development in the future.
The commission recommends that farmers in the new EU nations receive only 25 percent of the direct payments made to Western European farmers under the EU's Common Agricultural Policy (CAP), a network of subsidies to support member countries. The proportion would increase to 35 percent by 2006 and not ramp up to full parity until 2013.
The commission's justification for the timeframe is that beginning full payments immediately would not only bankrupt the European Union -- last year the CAP consumed 43 percent of the total EU budget -- but also would derail attempts at agricultural reform among the new members. One of the loudest criticisms of the current CAP is that it removes all desire within the EU to rationalize its highly inefficient agricultural sector, wherein farmers are paid an average annual subsidy of $17,000 per person regardless of the value of their foodstuffs.
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Dan
EU Subsidy Ruling To Alienate New Members . . .