Reforming the EU budget


A report from the European Commission, which could see Irish tax payers paying over £100 million to support CAP payments, has drawn legitimate howls of outrage. The Fine Gael leader, Mr Bruton, has led the charge warning that the proposals could herald the beginning of "re-nationalisation" in farm subsidies where national governments - and not the Union itself - makes direct payments to farmers.

The proposals, which were considered by members of the Commission in Luxembourg yesterday, form part of a wider discussion on how the EU budget should be financed. The net contributors to the budget - principally Germany, The Netherlands, Sweden and Austria - are following the example set by Mrs Thatcher in the 1980s and demanding some of "their money" back. Ireland and several other beneficiaries like Spain, Portugal and Greece are apprehensive about any radical change.

Reform of the EU budget in the way now under consideration would have serious implications for agriculture since other richer states would be better able to support their farmers. It remains to be seen how the proposals, prepared by the Commission in response to complaints from some states that their EU contributions are excessive, will work their way through the system. In the past, much of the blustering about budgetary contributions, which surfaces periodically, has fizzled out inside the EU Council of Ministers. In the final analysis, member states like Germany have always placed a higher premium on the principle of EU solidarity and equity.

It may be that the situation is somewhat different on this occasion. Within weeks, it is expected that a new SDP/Green government will be formed in Germany. The likely new government, which draws only a negligible level of support from rural areas, will be much less beholden to the farming interests than any government in the past two decades. It is also likely to be a much more inward-looking government than any during the Kohl era; indeed it has been mandated to give greater priority to domestic issues like the record levels of unemployment.

There is some concern in EU capitals that Germany - which contributes some 60 per cent of net EU spending - will, suddenly, become much less communautaire in its approach.

It is to be hoped that Germany and the other net contributors will look to the broader picture. While these states contribute generously to the EU's coffers they are not being entirely altruistic; they also reap important benefits in the shape of increased market access and commercial opportunities.

The Commission, which has always been a robust defender of the smaller states, is right when it says that "net contributions give only a narrow view of the benefits accruing to member states from participating in the EU."

It may be that concerns about Germany's intentions are overstated and that the Chancellor-elect, Mr Schroder, will look to the wider European interest. But the Government must not just hope for the best; it must launch a vigorous lobbying campaign in Bonn and Brussels to ensure that some of the current notions about reform of the EU budget do not materialise.