Status for EU funding may last only five more years

IRELAND is likely to retain its key Objective One status for EU funding - but only for five years - in proposals for the 1999-2004 budget now being considered by The European Commission, sources close to the Commission suggest. Overall structural funding for Ireland is also set to fall.

Commissioners and senior cabinet officials were on Friday presented with the secret 1,200-page draft outline of a package of Commission papers on enlargement and its effect on the next budget. The proposals, due to be made public on Wednesday, July 16th, to MEPs in Strasbourg, include major reform of structural funding and the Common Agricultural Policy (CAP) and will be of particular importance to Ireland.

Commission sources say the proposals will not come as a surprise except in the scope of plans for CAP. They suggest the Commission has also been willing to accept some Irish arguments that the country's recent financial success has left some major infrastructural catching up to do with fellow member-states.

Irish diplomats, recognising the inevitability of cutbacks, are understood to have been pressing for a phased reduction in the country's entitlement to maximum grant-funding, rather than an immediate cut-off or a regionalised approach. If they are successful, as now appears to be the case, it should be easier to safeguard social fund spending, particularly on training, in the capital.

Ireland's economic success is predicted by the Commission to push its GDP per capita to 192 per cent of the EU average in 1999 well above the current 75 per cent eligibility limit for the Objective One status of the poorest regions.

The truth is that Ireland must prepare itself for a significant reduction in its net take from the EU, currently running at more than Pounds 2 billion a year and totalling, since accession, more than Pounds 20 billion (including CAP payments). Even if the Category One status is retained for a few years Ireland will certainly not end up again as the largest per capita beneficiary.

The Commission has made it clear that because of budget constraints on all members it intends to proceed with enlargement on the basis of the current EU spending ceiling, 1.27 per cent of Union gross product. But, assuming an annual growth rate of 2.5 per cent until 2006, the Commission should find itself with an additional Pounds 15 billion to spend on enlargement if existing programmes are frozen at their current level.

On the CAP front, the Farm Commissioner, Mr Franz Fischler, has made it clear he intends to extend the MacSharry reforms to bring EU prices closer again to world equivalents and provide income compensation to farmers. He is also likely to try to give national governments a freer hand in targeting such compensation at the farmers really in need.

On the enlargement of the Union, 1,000 pages of the 1,200 are devoted to formal opinions from the Commission on the readiness of the 10 central and eastern European applicant countries to sign up to all the commitments required of EU members.

Some are certain to be disappointed that their membership will be put on the long finger, although the Commission is expected to recommend the establishment of a new Europe conference to act as a waiting room for all those whose applications areformally in the pipeline.

In addition to Cyprus, which is already guaranteed a place at the accession talks table in January, those certain to be in the first group of negotiations include Poland, the Czech Republic, Hungary and Slovenia.