COUNCIL OF MINISTERS: CACERES MEETING SPLIT OVER ENLARGEMENT COSTS.

The Franco-German attitude is presumably a stratagem, reflecting the wait-and-see approach Chancellor Gerhard Schroder and French President Jacques Chirac agreed on during their mini summit in Berlin at the start of the week. The idea is to prevent the enlargement talks affecting their fortunes in their respective elections. Nevertheless, Spain's ambassador to Germany sent Josep Pique, Madrid' Foreign Minister and the man who chairs General Affairs Councils during the first part of the year, a memorandum warning that German Finance Minister Hans Eichelis preparing to attack the European Commission proposals together with other countries that are net contributors to the EU budget. In a nutshell, Mr Eichel believes that commitment appropriations in 2002 should not exceed those that were approved for that year during the March 1999 Berlin Summit under the Agenda 2000 programme and the financial perspective for the 2000-2006 period. This may be backed up by a 20% premium to take account of EU membership for a further four countries, on top of the six originally catered for. In short, with enlargement being postponed for two years the budget scenario envisaged should only have to be postponed and the budget would be a maximum of Euro 7.74 billion in terms of commitments compared to the 10.794 billion announced by the Commission. The same reasoning obviously applies to the following years.Within the Council's Enlargement group, where the Member States' Permanent Representatives (COREPER) considered the proceedings on February 7, this split was already apparent. The Greek, Portuguese, Luxembourg and Irish delegations were the only ones, apart from the Spanish Presidency, backing the Commission position. Denmark cautiously reserved its opinion with an eye to its forthcoming Presidency. COREPER sent the six-page paper from the working group to C ceres with only a brief covering note highlighting what are seen as the key questions. These include:- whether to accept the principle of direct payments to farmers;- whether the balance is correct between direct payments and rural development;- how far to avoid a link between enlargement and EU reform - particularly of the Common Agricultural Policy;- what methodology the Commission used in adjusting the figures agreed by Member States in Berlin in 1999;- what should be the correct level of co-financing for rural restructuring;- what allowance should be made for cohesion funding within structural actions;-...