BUDGET: SUPPORT GROWING FOR SQUEEZING FARM SPENDING.

The meeting of EU member states' permanent representatives was discussing the Luxembourg Presidency's "negotiating box" or outline compromise paper for the 2007-13 financial perspective (see Europe Information 2944). While the discussion focused on general remarks about the text and Heading 1 on "competitiveness for growth and employment", ambassadors also stated their views on Heading 2 ("preservation and management of natural resources") which includes expenditure on agriculture, rural development and fisheries. The Italian, Portuguese, Latvian, Dutch and Swedish representatives said that there should be no additional funding for Romania and Bulgaria, although the Belgian and Irish ambassadors insisted on the need for extra funding.

The member states' call for squeezing the 2002 agreement on agricultural spending until 2013 comes in the same week as the member of the European Parliament drafting the EP's position on the financial perspective, Reimer Boge (EPP-ED, Germany) also said there should be no extra money for pay for Romania and Bulgaria's farm support. His view has received support from a large number of his colleagues as well as many representatives of national parliaments (see Europe Information 2951).

According to EU sources, there was an animated exchange between the French permanent representative Pierre Sellal and his Portuguese counterpart Alvaro Moura. Lisbon's ambassador questioned the French position of calling for an overall budget limit of 1% of Gross National Income (GNI), (worth Euro 815 billion from 2007-13), saying it could not be reconciled with respecting the 2002 farm financing limit. With an overall limit of 1% of GNI, that would mean agriculture would get Euro 405 billion or 49.6% of the total which was "unacceptable", the Portuguese ambassador said. "One (figure) must go up or the other come down", he is reported to have told his French colleague.

Another issue concerning Heading 2 which provided divisive was the question of how to allocate funds available from the budget line for market-related expenditure and direct payments for rural development and fisheries. The Luxembourg's Presidency's negotiating box suggests two options for allocating these funds: either based on the historical percentages of expenditure in these areas during the 2000-06 period (2004-06 for the new member states) or in a way to be determined by the member states in consultation with the Commission. During the meeting the...