Economy & Trade, Environment, Europe, Headlines

EUROPE: In a Civil War over Subsidies

David Cronin

BRUSSELS, May 21 2008 (IPS) - Few things cause tempers to flare up among governments on both sides of the English Channel more than the future of the European Union's massively expensive farm subsidies regime.

Under former prime minister Tony Blair and Prime Minister Gordon Brown, the British government has been arguing for radical surgery to the Common Agricultural Policy, which gobbles up over 40 percent of the EU's 121 billion euros (188 billion dollars) yearly budget. In response to the crisis sparked by soaring food prices in poor countries, Alastair Darling, the British finance minister, argued earlier this month that all elements of the CAP designed to keep EU food prices above world market levels should be phased out.

Although Nicolas Sarkozy, the French president, had intimated he was open to a debate about CAP reform when elected last year, Paris has more recently reverted to its traditional role as the most staunch defender of the status quo. Michel Barnier, the agriculture minister, has described the CAP as a "good model" and argued that similar policies should be adopted by regional groupings in Africa and Latin America.

Against the backdrop of Anglo-French tensions and riots over food prices in the wider world, Mariann Fischer Boel, the EU's agriculture commissioner, unveiled a series of measures May 20 designed to 'upgrade' the CAP, rather than reform it. As a farmer in her native Denmark, Fischer Boel has good reasons to defend the CAP. In 2005, it was revealed that she and her husband were drawing about 77,000 euros a year in EU farm subsidies, although she has more recently insisted that her daughter has taken over responsibility for the family's holding.

Her proposals, which will require support from EU governments before they can be implemented, include ending a provision known as 'set-aside' where 10 percent of farmland has to be left fallow. The removal of this policy is designed to boost the productivity of agriculture.

She has also advocated that the Union's milk production quotas should be phased out by 2015, and an end to the practice whereby non-farmers have been able to receive farm subsidies. The latter phenomenon was highlighted in a report by the EU's financial watchdog, the Court of Auditors, last year, which found that golf clubs in Ireland and pony clubs in Denmark were among the CAP's beneficiaries.

Fischer Boel's package appeared to contain good news for those who regard the EU's export subsidies as a key impediment to the growth of agriculture in poor countries. Such payments, which were as high as 15 billion euros per year in the 1990s, have long been blamed for undermining agricultural markets in poor countries because farmers there have been unable to compete with subsidised imports.

Yet because the gap between world prices and those within the EU has narrowed, the amount that the Union spends on refunding farmers for the difference has shrunk. Fischer Boel has recommended that some of the money that had been allocated to export subsidies but unspent because of economic factors should be lent to small farmers in countries affected by the food crisis. She did not specify what sum could be made available for that purpose but stated that "it's not peanuts."

Jack Thurston, founder of farmsubsidy.org, a group campaigning for greater transparency about EU farm policies, was unimpressed by Fischer Boel's recommendations.

"Almost nothing in these proposals will have any effect while this commissioner is still in office," he said. "They are all very much about tinkering around the edges."

He argued that while the new proposals could result in a slight reduction of payments going to the largest landowners, they do not address the deep-rooted unfairness in the system. "Relatively wealthy countries like Ireland are the highest per capita beneficiaries," he added. "But wouldn't the right thing to do in terms of social solidarity be to help where there is real grinding rural poverty: in Romania, Bulgaria and Poland, for example? Isn't that supposed to be the spirit of the EU?"

Green activists have argued that Fischer Boel has missed a chance to redirect farm subsidies so that they can be spent on addressing the most pressing environmental problems facing the European countryside such as the loss of flora and fauna attributed to intensive agricultural techniques and shortages of water brought about by climate change.

"The Commission has wasted the opportunity to offer Europe a better CAP," said Clairie Papazoglou from the conservation group BirdLife International. "The EU wants to be a global frontrunner in tackling the dramatic environmental problems of our time, but with this proposal it risks losing its credibility. How should we convince Brazil to protect its rainforest, if we are continuing to degrade our own rural ecosystems?"