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Thursday, November 13, 2003

Spain and Poland Face Aid Threat

Things are begining to get more complicated in the EU. With the enlargement this was inevitable. This was Ms Thatcher's dream. OTOH I don't see the advantage in delaying the decision about funding. If you want cooperation and agreement about the constitution, given that the two topics have now been publicly 'tied', maybe it would be a more productive tactic to advance on the two in tandem. Again, this is a second best world.

A highly sensitive European Commission paper on the next EU budget - including proposed cuts in regional aid to Spain - is expected to be delayed to avoid disrupting a deal on a new EU constitution. Romano Prodi, Commission president, was supposed to present the paper to EU leaders at their summit in Brussels on December 12-13. But Mr Prodi fears that any debate on EU funding could complicate a fraught final round of negotiations on the constitution. "It could be dangerous to mix up the two issues," said one official close to Mr Prodi. "A slight delay until later in December or until mid-January might be better."

The paper will outline a huge shift of EU aid from existing members, including Spain and eastern Germany, to 10 countries joining the EU next May, mainly from the former communist bloc. Spain, the biggest recipient of European Union aid, could lose billions of euros a year. It is also the country regarded as the biggest obstacle to an agreement on the constitution. Spain and Poland are threatening to block a deal unless they retain their voting power in the Council of Ministers, which gives them almost as much clout as larger countries such as France and Germany.

Some fear that Spain could try to link any concessions on voting weights with demands for more money in the next EU budget round, running from 2007 until 2011 or 2013. Gerhard Schröder, German chancellor, has explicitly warned that if Spain and Poland delay a deal on the constitution, they could expect to suffer financially. "Those who don't see that will have to learn that you cannot neglect such aspects and go unpunished," Mr Schröder said this month. In an attempt to avoid injecting a bitter debate about money into the constitutional talks, Mr Prodi believes it would be better to hold back on giving the first details on how the next EU budget might look. A final decision on timing will be taken next week.

Early drafts of the budget suggest it will be sensitive, since it will identify which regions are set to lose the most money. A total of 18 regions will no longer qualify for the EU's highest aid category - Objective One - simply because the Union's average gross domestic product per head will drop sharply after the "big bang" enlargement next May. They include six regions in the former East Germany and four regions in Spain, all of which would be left with a much lower level of transitional aid from the EU budget.
Source: Financial Times

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