No More Fudges

The Malta Independent 

 

  Reports suggest there will be no initiative to rescue the constitution, no agreement on the budget for 2007-13 and an unusual silence on what many consider the EU's most successful policy - enlargement. ` (source BBC News 16th June)

These were the expectations at the start of the two-day EU summit that ends today in Brussels under the Luxembourg presidency. What a difference a few weeks make!

Before the electoral thumbs down in the French and Dutch referenda for the EU constitution, there were much higher expectations from this Summit. It was expected to goad the smooth process of ratification for the Constitution at national level. It was expected to broke a deal for the EU Budget 2007-2013 as the Franco-Germanic alliance corner Blair, free from political pressure following his recent re-election, into giving up most of the UK rebate negotiated by Mrs Thatcher in 1984.` This was necessary in the Franco-German eyes so that there will be enough funds for the poorer countries of the recent enlargement without having to increase the overall size of the budget (a German priority) and without sacrificing the benefits enjoyed under the Common Agriculture Policy- CAP (a French priority). Chirac and Schroeder had made a separate deal on such an approach some two years back.

The French rejection of the EU constitution in the referendum of 29th May changed all that. It has greatly strengthened Blair`s position in the EU in general and on the` Budget negotiations in particular as it has freed him from the need to play let`s pretend games to get popular domestic approval for the Constitution, now that the referendum scheduled for next year has been revoked or at least put on hold.

Blair can afford to play tough. While he is assured of his seat round the EU presidency table for the next 5 years he knows that the tandem of Chirac and Schroeder is disintegrating as both seem set to lose their democratic mandate to represent their countries. Schroeder could receive the order of the boot as early as next autumn if he proceeds with his promise to call early elections in September. The result, if such elections are really held, is almost a forgone conclusion ending Schroeder`s political career.

French Presidency elections are two years away but the French electorate`s dissatisfaction with the second Chirac Presidency showed up clearly in the referendum result and his arch rival Sarkozy seems set to edge Chirac out of his job.

The result of such changes in the coming 24 months will mean that the Franco German conspiracy against Britain, which was strengthened during the build-up and the aftermath of the Iraq war, will disintegrate. It could mean that the liberal British model so much despised by Chirac, would find better support if Angela Merkel and Nikolas Sarkozy are sitting at the EU presidency table representing Germany and France instead of Schroeder and Chirac.

In the Sunday sister of this newspaper I wrote on the 29th May 2005, the day of the French referendum, that the probable rejection of the French and Dutch in the then up-coming referenda was probably a blessing in disguise.

I argued that the immediate economic impact of such rejection would be a substantial fall in the value of the Euro on the foreign exchange markets.` It happened just as predicted. These last 18 days the Euro fell some 5% against the US dollar and some 3% against the Sterling pound. No other single measure could have been so effective in breathing some oxygen back into the Euro economies by making them more globally competitive.

I say the same thing regarding today`s negotiations regarding the EU Budget for 2007 `2013.` Disagreement is better than a fudge that would leave the EU countries subsidising rich French farmers for a further seven years whilst denying much needed structural regional support for new member states.

The real problem with the EU budget is not the British rebate.` The rebate was a mere compensation for the excess subsidies drawn by France under the CAP mechanism. Although the share of funds allocated to CAP is reducing the fact is still that 45% of the EU budget is allocated to 2% of population represented by the agriculture sector of the EU 15 whose standard of living is multiple times better than the average in the new member states.

The need for the UK rebate would fall away if France does everyone a favour and climbs down on its obstinate objection to an immediate reform of CAP to reduce the level of subsidies necessary to keep functioning uncompetitive sectors which in terms of fairness should migrate to third world countries if more liberal trade in agricultural produce is agreed at WTO level. Such liberalisation in Agricultural trade is what Africa needs to get out of its poverty trap.` Live Aid and debt forgiveness are useful but temporary measures.` Liberalisation in economic sectors where poor countries can actually compete` delivers permanent economic benefit eradicating poverty and boosting world investment and consumption.

We should not regard the probable failure of today`s summit with disappointment. We have had too many fudges in the past and we need no other if the objectives of the Lisbon Agenda are to be achieved.` What we need is inspired EU leaders who can rise to the occasion and reconnect the people with the EU institutions by working on a Budget and a Constitution based on reality and flexibility permitting EU economic growth and addressing structural unemployment. Chirac and Schroeder do not fall in that category of leaders.