For the financially troubled European Community, the setbacks unfolded with stunning regularity. Angry French farmers, seeking large pay increases from the EC’s agriculture ministers, closed the country’s borders to foreign food imports. In London, Prime Minister Margaret Thatcher, campaigning for a renewed mandate in the June 9 election, declared that she will demand a $1.4-billion rebate on Britain’s contribution to the community’s budget this year. Most member governments of the 10-nation alliance issued calls urging it to spend more to ease the plight of its 12 million unemployed. Only two weeks earlier community budget experts had warned that the EC was on the verge of bankruptcy. Last week’s events did not seem likely to stop the slide.
The French farmers’ violence was the most visible danger sign. Their destruction of a consignment of British mutton near Cherbourg drew an official protest from London. But in the end financial experts working behind the Venetian blinds of the community’s headquarters in Brussels succeeded in partially defusing the threat. They managed to produce a figure for farm price increases this year—4.2 per cent—which won the French government’s grudging approval. Because of the EC’s complex subsidy and levy system, the benchmark rise actually meant an eight-per-cent increase
for French farmers. But the farmers themselves were not immediately appeased. As demonstrations continued at week’s end, a spokesman promised to step up the action unless a satisfactory solution was reached.
However, in giving European farmers generally their lowest pay increase in a decade, the EC went some way toward closing the cash drawer to Europe’s powerful agricultural lobby. As a result, the award reduced the risk of a farm war with Washington, which charges that high community food subsidies give European farmers an unfair edge over their U.S. counterparts in world markets. Said the West German agriculture minister, Ignaz Kiechle, who chaired the ministerial marathon that agreed to the increase: “It shows we are willing to improve our negotiating position with Washington.”
Within hours of its farm-price decision, the EC received a second piece of good news. Thatcher, who had planned to use a European summit in Stuttgart on June 6 to push her demand for the rebate, agreed to a suggestion from West German Chancellor Helmut Kohl that the meeting be put off until after the British election. The switch of dates neatly avoided a damaging eve-of-poll brawl between Thatcher and her colleagues. It also won time for the EC to come up with a settlement formula.
Still, the long-term problem of the
community’s Common Agricultural Policy remains. Farm subsidies swallow two-thirds of the EC’s current annual budget of about $25 billion. Not only that, but they encourage Europe’s eight million farmers to produce huge surpluses of butter, cereals, sugar and wine. The chance of a successful solution to the problem currently rests on a proposal by President Gaston Thorn of the European Commission, the community’s administrative body. Thorn has suggested that in future farm subsidies be limited to one-third of the community’s budget. He also proposed that its revenues should be increased by raising the EC’s levy on member countries’ sales tax revenues to 1.4 per cent from one per cent. The additional money would help to fight unemployment and would ease the entry of two applicants for EC membership—Spain and Portugal. Thorn’s plan will be on the agenda at the Stuttgart meeting, which Belgian Minister of Foreign Affairs Leo Tindemans described as Europe’s “moment of truth.” But so will the admission of Spain and Portugal and the British rebate. Indeed, the most likely outcome is that the problem of community finances will be deferred and that its resolution will take years, which, as a senior EC aide in Brussels admitted ruefully, would “give us plenty of time to land in the POORHOUSE.”-PETER LEWIS in Brussels.
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