Cold Comfort Farm
It was always certain that the Polish side would blink first. This is exactly what happened. Poland's government belatedly recognized that getting 100% direct payments was impossible and rapidly began amending its negotiating stance.
" Dispensation from Brussels to top up direct payments from Poland's national budget
" Shifting EU resources from structural funds to direct payments
" Permitting Poland to keep some limited tariffs in play to protect the most vulnerable segments of the agricultural market
The government also pleads for maintenance of 0% VAT on agricultural equipment and sharply higher production quotas for Polish farmers.
On the face of it, the switch in the negotiating position is perfectly logical. All Poland is asking for is the ability to compensate for Brussels' refusal to grant Polish agriculture a "level playing field." The Polish government fears, not without justification, that the EU offer is intended to harm the competitiveness of Poland's agriculture. The measures being proposed would provide the Polish government with ramparts for protecting farmers.
The problem is that this negotiating position opens up a minefield. Asking for the right to top up direct payments from the domestic budget runs totally counter to Poland's declared objective of resisting the handing back of control over farm policy of agriculture to member states and dismantling much of the Common Agricultural Policy. It is obviously not in Poland's interest for individual member states to be given the task of granting direct payments to their farmers as the capacity of the Polish budget will for many years to come be relatively lower than that of the current member states. The principle of common cause - the rich club members diverting resources to poorer ones - is declared Polish strategy.
The top-up ploy looks deceptively convenient. It might enable the government to pull the wool over the eyes of rural voters. However, sooner rather than later it will be clear that the sums on offer are nowhere near the expectations aroused. It is also a matter of some doubt whether a post-referendum SLD government would continue funding the PSL's electorate.
Compensatory tariffs and the shift from structural funds to direct payments are nonstarters. The tariff issue is a double-edged sword for Poland anyway. It would no doubt lead to retaliatory measures from other member states limiting access to their markets. Brussels will certainly resist the movement of money from structural funds to direct payments. The European Commission is convinced that Poland desperately needs to modernize the countryside, yet by voluntarily reducing its pool of structural funds, Poland would slow down the development of its capacity to absorb EU funds at a time when it needs them most.
Renegotiating hot tax issues such as VAT on construction and 0% VAT on agricultural machinery is not impossible, but will probably lead the EU member states into an attempt to extract from Poland new concessions in areas thought settled. Only the issue of higher production quotas on agricultural produce seems to be an area where Brussels might soften. However, concessions there may be meaningless if Poland opts for a system of simplified direct payments (i.e., paying per hectare rather than by production). It will amount to social welfare payments to farmers who do not even produce for the market, while serious producers will be set at a further disadvantage in EU markets.
Faced with the prospect of possibly unfavorable terms for membership, especially in farming, it is not surprising to find the Miller government contemplating a snap referendum on May 11. Any later, and the optimistic budget prepared by Grzegorz Kołodko could come apart at the seams, and talk of compensating farmers from the budget would seem like science fiction.
Once the referendum is out of the way, the SLD will not have to worry too much about either the PSL or the farmers.
