Money the bottom line in EU negotiations

Poland's progress toward European Union (EU) accession could be derailed as internal EU rifts over agricultural policy knock back negotiation schedules. This year's elections in France make it unlikely the EU will produce a common negotiating position during the first half of 2002, according to analysts, a step that must be completed before the sides can formally start talks. The timely success of the negotiations is crucial if Poland is to meet its 2004 target for joining the EU and obtain Ä5 billion ($3.57 billion) in funding to reform its agricultural sector. The agriculture talks were scheduled to take place before the end of June. But EU analysts see the French government as unwilling to make a commitment on the agricultural chapter before their presidential elections in April and national assembly elections in June. "I think almost nothing is going to happen ... before the French elections, certainly not on agriculture," said Heather Grabbe, research director at the Centre for European Reform, a U.K.-based think tank. "That means (the negotiations) could get pushed into the Danish presidency because it will be very difficult to get a deal between the French elections in May and the end of the Spanish presidency at the end of June." Grabbe said that this would overload the agenda for Denmark's presidency, potentially pushing back the completion of negotiations to 2003. The EU last week continued to signal that full common agricultural policy (CAP) benefits for candidates would not immediately be available. "The true challenge will be in maintaining rural communities and making rural areas throughout Europe viable in the long term," said Franz Fischler, the European commissioner responsible for agriculture, during a speech in Berlin. "It would be completely wrong to believe that we can simply transfer the existing CAP directly to the applicant countries on the day they join the EU." Polish officials have pushed for full and immediate access to CAP funds. Adding to concerns, Spanish officials are worried that the accession of candidate countries, which are generally poorer than current EU member states, will slice its share of EU regional development aid unless the criteria for allocating aid are changed. Regional funds are intended to remedy disparities in income and employment across Europe. Last year Spain, the EU's largest recipient of regional aid, delayed negotiations on the free movement of labor as a way of obtaining recognition for its concerns about the level of regional aid it will receive after EU enlargement. Although Spain has made enlargement a key priority of its EU presidency, analysts see its scheduling of the agricultural talks as a further attempt to delay enlargement until the issue of regional development funds is resolved by the European Commission (EC). Antonio García Ferrer, counselor at the Spanish Embassy in Warsaw, said that while France held an important role in the agricultural negotiations, the scheduling of the negotiations was not intended to stall them. "Admittedly, France is an agricultural power and has important ideas on how to deal with enlargement concerning agriculture but I wouldn't see this as more than a coincidence," García said. "The process of enlargement is among the priorities of the Spanish presidency and we see it as a challenge and are working flat out to close as many chapters as possible following the ‘map' issued by the commission a year ago." Although the EU has not announced any proposals on the allocation of regional funds after enlargement, analysts like Deutsche Bank economist Barbara Böttcher say that new criteria could take into account national rather than regional levels of gross domestic product (GDP) in the same way as EU structural funds. This solution would pose a particular threat to Spain's interests since new EU entrants, like Poland, have a lower GDP and would be eligible for a greater share of the regional development budget. "Poland should be worried about the Spanish position and also the countries that agree with it like Portugal and Greece," Grabbe said. "It's going to be very difficult for the EU to come up with a deal that satisfies all of the 15 countries and they will not want to change it in negotiations simply because the candidates are not happy with it." Grabbe considers the EU budget too small to remedy regional economic differences. "The budget is only 1.27% of EU GDP and 47% of that goes to agriculture, which leaves only a small budget, which can't have a major redistributive effect," Grabbe said. The EU's 2002 budget allocates Ä95.7 billion ($85.2 billion) for internal programs, such as agriculture (Ä44.3 billion) and structural funds (Ä33.8 billion), and Ä4.8 billion ($4.3 billion) for external action, such as aid to the Balkans and Afghanistan. Despite warnings, the Polish side is confident that the accession chapter on agriculture will be closed during the Spanish presidency. "We believe the politicians of the European Commission who say that the budget established for the accession of six countries in 2002 could be spread over more countries and deferred until 2004," said Ewa Haczyk, spokeswoman for Poland's Committee for European Integration (KIE). "The EU is not just a trade organization but a union with political aims and adheres to the principle of solidarity, hence the proportional distribution of structural funds. We believe that Spain will not forget that member states are bound to these principles."