Greed and the politics of food subsidies

'A fair price for farmers and protection of the environment were enshrined in the 1957 Treaty of Rome

'A fair price for farmers and protection of the environment were enshrined in the 1957 Treaty of Rome.' The anecdote told by an English-speaking official at the EU Commission may be apocryphal, but it says a lot about how Paris is viewed in Brussels these days, writes Lara Marlowe.

In May, when President Jacques Chirac heard that President Bush had approved $180 billion in agricultural subsidies, the French leader allegedly exclaimed: "I am scandalised and delighted". Mr Chirac could have no better weapon in his fight to preserve the Common Agricultural Policy (CAP).

Since the Agriculture Commissioner, Mr Franz Fischler, unveiled his plans to reform the CAP, France - the biggest farming country in the EU, accounting for nearly 23 per cent of European production - has taken the lead in resisting proposals to "de-couple" subsidies from production.

French arguments for perpetuating the CAP are similar to Ireland's. The original justification - that post-second World War Europe had to guarantee food self-sufficiency - dissolved in wine lakes and butter mountains decades ago.

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Yet a fair price for farmers and protection of the environment were enshrined in the 1957 Treaty of Rome and are considered part of the foundation of the European Union.

On a more mundane level, Paris argues that Mr Fischler was asked to conduct a mid-term review of Agenda 2000 - not propose wide-reaching reforms. Mr Chirac firmly resisted German attempts to renationalise the CAP at the March 1999 Berlin Summit; Franco-German relations have still not recovered.

It would be arrogant and unfair to revise the CAP now, before 10 new members join in 2004, the French say. And the Fischler proposals did not include sufficient analysis of their impact on farmers and especially agri-business.

Are the French merely stalling for time, in the hope of prolonging the EU gravy train as long as possible? Or is Paris right to be cautious about reforms that place hundreds of thousands of jobs and significant sectors of the economy at risk? At the end of the day, it may not matter. Paris - and Dublin - know they are fighting a losing battle.

The public are leery of the intensive agriculture that has repeatedly created food safety crises. And agricultural subsidies have become a casus belli for developing countries. Dr Magdi Farahat, an Egyptian diplomat deeply involved in World Trade Organisation negotiations, believes local agricultural subsidies - which now account for 75 per cent of CAP spending - will be phased out completely in a decade. Export subsidies - the other 25 per cent - could be banned before the current round of WTO talks ends in January 2005, he says.

Dr Farahat believes the EU will ultimately sacrifice agriculture in exchange for liberalisation in other sectors.

"If not, there's nothing left for the developing countries in the WTO, and they'll block the whole thing," he explains. It was once fashionable to compare the trillions of dollars spent on defence budgets with the paltry sums devoted to development aid. That argument has given way to a more relevant comparison between agricultural subsidies and development assistance.

The OECD (the world's wealthiest nations), says its members spend $311 billion annually on agricultural subsidies - six times what they spend on development aid. Not only do rich countries often prevent produce from developing countries from entering their markets, they swamp Africa, South America and Asia with their subsidised agricultural surpluses, sometimes in the form of development aid.

"One of the biggest problems is the scope of obfuscation about the real results," says Mr Jonathan Brooks, an OECD economist.

Mr Yannick Jadot, of Greenpeace France, gives the example of BSE contaminated beef which between 1996 and 2000 found its way to Nigeria, at a lower price than local meat. "Not only do we export products that we consider unfit for consumption, we completely destroy the local markets," he says.

Mr Jadot says France is the biggest culprit. "But everyone shares the guilt. You find Irish beef all over Africa, French meat and cereal, Italian tomato concentrate, which prevents local industries from developing." France received €9.4 billion in EU agricultural subsidies last year, and spent $4.3 billion on development assistance.

Ireland received €1.38 billioin EU agricultural subsidies, and spent $285 million in development aid.

These two big beneficiaries of the CAP are slightly more generous than the average European government in terms of development aid, but neither would appreciate the comparison between what they receive and what they give.

Mr Jadot rejects the agricultural subsidies versus development aid paradigm. "It's like saying, 'Our policies hurt you, so we'll give you a consolation prize'."

US subsidies and greed are more harmful than Europe's, he adds, "but that does not in any way exonerate Europe. It's not because the Americans are cynical and selfish that Europe can be content to be less bad."