Ahern pleased as leaders shy away from Agenda 2000

EU leaders made an important commitment on Saturday to the long-term future of EU farm spending but otherwise, to the delight of Ireland, shied away from any discussion of a package of reforms of the internal policies of the EU proposed by the Commission in Agenda 2000.

With Spain leading the poorer cohesion countries in insisting that there could be no pre-empting of the complex budget discussions for the period 2000 to 2006, particularly on the key question of an overall ceiling on spending, there was no hope of agreement on more than the blandest of statements.

The summit simply endorsed the need for "budgetary discipline" and accepted that Agenda 2000 would provide "the working basis for future negotiations".

The Taoiseach, Mr Ahern, welcomed the outcome. Any attempt to set a ceiling on spending, he said, would have had to be balanced by perhaps controversial language on the EU's commitment to cohesion and transitional arrangements for states which will lose top-rate structural funding.

These are all up for discussion in 1998, he said, when the Commission brings forward its detailed country-by-country proposals on structural funding.

The budgetary ceiling on spending was set by the Edinburgh summit at 1.27 per cent of EU GDP. The Commission proposals retain it at that level. Indeed, on the basis of economic growth forecast at an average of 2.5 per cent a year over the period, the Commission projections show the growth in spending ending up significantly below the ceiling.

The agreement on the agricultural spend is significant, however. Committing themselves to a continuation of the MacSharry market reforms, the leaders agreed that the "agriculture guideline", Eurospeak for farm spending, would be allowed to rise during the 2000-2006 period at a rate of 0.75 per cent for every 1 per cent of economic growth.

The deal makes possible the scale of compensation to farmers for price cuts broadly envisaged in Agenda 2000. The decision to put off discussions on internal reform also buried for the time being attempts by the Germans and Dutch to commit the member-states to a re-examination of the system by which members' financial contributions to the EU are calculated, something the Commission has argued should be left until the following budget.

Both Germany and the Netherlands, with domestic elections next year, insist their net contributions are unduly heavy and have asked the Commission to conduct a study.

But opening up a full debate on it would make the prospects of negotiating a budget package far more difficult, a gloomy prospect for Ireland, struggling to retain its funding.

Although the contributions of memberstates reflect fairly their relative wealth, the payments system is based on the EU's structural priorities. The result is that net contributions appear unbalanced.