Who Will Pay the Price of Enlargement?

LONDON: The glow of optimism at the European Union's Helsinki summit last month, when EU leaders decided to extend membership negotiations to all ten candidate countries from Central and Eastern Europe, plus Malta and Cyprus, is fading fast. It has now become crystal clear that enlargement is going to be a very difficult process: difficult to negotiate, and just as difficult, perhaps, to sell to the voters.

The predicament can be expressed in stark terms: Who Will Pay the Price of Enlargement? Enlargement will not be cost-free: there will be losers, as well as winners. But the common dilemma facing all sides in this negotiation, the ins as well as the outs, is to make sure that there are not too many losers in any one country. Otherwise, enlargement simply will not get past the voters.

The most immediate manifestation of this predicament is the European Union's Common Agricultural Policy. This policy has long been a burden, both on EU consumers, because it has kept food prices high, and on EU taxpayers, because the subsidy to farmers' incomes costs the Union some e(Euro) 41bn every year (about $40bn), or around half of the total EU budget. But it has been part of the core bargain which has kept the union together.

On purely economic grounds, subsidising EU farmers has no justification, and it is an increasing anomaly in a world of global markets and international competition. At the start of the Common Market, it was the political price insisted on by France, a major agricultural country, as the condition for opening the French market to German industrial goods.