Ahern hopes France will agree a stance on CAP

 

The Taoiseach arrives in Paris today as part of his campaign throughout EU capitals to protect the Irish economy in the Agenda 2000 EU budgetary negotiations.

In his talks with French leaders, Mr Ahern will attempt to consolidate Franco-Irish agreement on reform of the Common Agricultural Policy (CAP) - from which Ireland received £1.3 billion in 1997, 56 per cent of all EU spending in Ireland. He will also seek French support on structural and cohesion funds.

Ireland stands to lose across the board in the negotiations on the EU budget for the next six years, since EU funding is expected to fall while Ireland's contribution to the EU budget may rise.

The Taoiseach will attend a working lunch with President Jacques Chirac at the Elysee Palace, followed by an afternoon meeting with the Prime Minister, Mr Lionel Jospin.

Mr Chirac is a former agriculture minister who takes a keen interest in farming and EU issues. His centre-right Rally for the Republic (RPR) is allied with Fianna Fail in the EU Parliament.

The international context has changed dramatically since the Taoiseach discussed Agenda 2000 with Mr Jospin in Paris last July. The new left-wing German Chancellor, Mr Gerhard Schroder, does not rely on farming votes and has embarked on an "I want my money back" campaign, not unlike Mrs Thatcher's 1980s crusade against Brussels. He is supported by the Netherlands, Austria and Sweden, all net contributors to the EU.

Germany, which now holds the EU presidency, has set a late March deadline for completing the budgetary negotiations. EU heads of state will meet in Bonn on February 26th - when they hope to complete the CAP portion of the talks - and again in Berlin on March 24th and 25th for final agreement.

The EU is expected to take in new members from central and eastern Europe in the course of the six-year Agenda 2000 budget. These countries have huge needs for agricultural and cohesion funds and the CAP, which consumes £45 billion of the £85 billion EU budget, is the first target for cuts to finance the upgrading of the new members.

As two major beneficiaries of the CAP, France and Ireland agree that reforms are needed, but they strongly oppose the German proposal that the CAP be "co-financed" by Brussels and national governments. Paris believes co-financing would lead to the dismantling of the CAP.

Instead, France has proposed a system of "degressivity", under which cuts in direct aid to large farms (small farmers would be exempted) would be compensated by higher quotas.

The savings from reduced direct payments would be used to finance rural development and to lower the cost to net contributors like Germany.

Ireland has not yet taken a position on "degressivity", but is inclined to prefer it to co-financing.

Paris and Dublin are closest on approaches to the beef and dairy sectors. Seven per cent of Ireland's GDP comes from beef and dairy farming, the highest proportion in the EU.

The French and Irish beef sectors are very similar, with both grass-feeding suckler cows for 24 months before slaughter. By contrast, German, Danish and Dutch beef farmers produce grain-fed bull meat and mature their animals for only 18 months.

There is broad agreement that EU intervention prices must come down to make European products competitive internationally and to placate the World Trade Organisation. But the opening negotiating position of France and Ireland is that any price reductions must be fully compensated.

French cereals consume 12 per cent of the entire CAP budget, and Paris might seek Irish support on cereals in exchange for flexibility on cohesion and structural funds - where France advocates major savings.

Ireland received £868 million in structural funds in 1997, but is now too prosperous to qualify for "objective 1" status. Rather than be considered a single region, Dublin is putting the case for Ireland be considered as two regions, one of which would still qualify for structural funding.

The Taoiseach is expected to explain to Mr Chirac and Mr Jospin that Ireland still suffers from an "infrastructure deficit", since its road network and water supply systems are not yet up to European standards.

Ireland's growth is recent and fragile, the Taoiseach is likely to tell the French leaders.

Under EMU, if one of the 11 euro economies suffers, it endangers the rest; so reductions in EU funding should be gradual - Dublin proposes a seven-year phase-out period for cohesion funds.

But with an Irish economic growth rate more than three times that of France and much lower unemployment, Mr Ahern may find the French need convincing.