Guardian: France holds the key

Guardian

France holds the key

As we approach the December meeting of the European Council, speculation is intensifying about the likelihood of an agreement on the EU's medium-term budget. Much hinges, it is said, on Britain's readiness to adjust the famous UK rebate, whereby a proportion of our contribution to the budget is refunded. This refund still leaves Britain as one of Europe's major net contributors - but to a far lower degree than would otherwise be the case.Blair's margin for manoeuvre at the summit is extremely small. Any deal he agrees to must be reasonable. He cannot be the only one to make a concession. And any concession made on the rebate must be matched by tangible achievements on reforming the structure of the EU budget, not least in reviewing agricultural expenditure.

So the key to a deal is actually France. France receives nearly a quarter of agricultural spending, and it has fiercely resisted reform of the common agricultural policy (CAP). This position is jeopardising not only a deal on the EU budget but also a deal in talks on world trade. The need to continue reforming agriculture is actually far more important for the future of Europe than is any conceivable adjustment to the UK rebate. France cannot hold the rest of Europe hostage to its addiction to agricultural subsidies - especially when one sees who actually benefits from these subsidies: not so much the poor peasant farmers of the Massif Central as the rich industrial farmers of the Paris basin.

There is no doubt that Blair genuinely wants a deal to be made. He is conscious of his European responsibilities and only too aware of how isolated Britain would seem if it were regarded as the main cause of a breakdown in a second European summit. Having successfully fought for the enlargement of the European Union, he knows that he can hardly balk at making a contribution to the cost of that enlargement. And if there is no change (or only small changes) to the refund, then the British contribution will rise less than that of France and Germany. He knows, too, that the economic significance of the figures being discussed is paltry. The entire EU budget is only around 1% of GDP - small change in macroeconomic terms. This is far less important than the economic benefits brought by the single European market, which he knows is so immensely important to Britain.

And Chirac, will he resist any reform whatsoever in agriculture? Or is he willing to make a gesture, in the interest of Europe as a whole? It is time for France to recognise that CAP reform, albeit inevitably gradual, is unavoidable. Blair will then be able to strike a satisfactory compromise, leading to a win-win situation from which the whole of Europe will benefit.