Blair uses the F word

My gut tells me there’s a bit of inevitability about reforming the EU’s ridiculous farm subsidies, so it surprises me that Mikulas Dzurinda, Slovakia’s PM, is only the first of the 24 one of the first of the many EU leaders lined up against Britain to break ranks. ?I am for reforms,? Dzurinda declared.

Meanwhile Blair is still talking tough, telling the European Parliament yesterday today that the EU risks “failure on a grand strategic scale.” (See also The Guardian‘s coverage on the speech.)

Sueddeutsche Zeitung believes that

President Chirac is in a far stronger position than Tony Blair, pointing out that there was unanimous agreement on the current system of agriculture subsidies in 2002.

This just strikes me as an odd thing to say. It seems to me the French and Dutch rejections have strengthened Blair’s hand immeasurably. But what do I know.

Timothy Garton Ash may not be terribly impressed with yesterday’s speech. Earlier this month he advised Blair against grand gestures and sweeping rhetoric:

No, the wise course for the British presidency is to behave in quite un-Blair-like fashion, in order to achieve the final, strategic triumph of Blairism. No missionary preaching. No headline-grabbing prime-ministerial initiatives. Instead: quiet, patient behind-the-scenes diplomacy and European-style consensus-building.

Hm. We’ll see.

In a column today (apparently written before yesterday’s today’s speech), T.G.A. takes both Chirac and Blair to task, calling the French-British rivalry “ridiculous, damaging, demeaning and pathetic.”

So many bad words!

UPDATE: “Across Europe, Blair’s vision of a changed EU gains support.” The momentum is already his, it seems.

18 thoughts on “Blair uses the F word

  1. You’re right, Scott. The French “no” has significantly weakened the French hand. Chirac may be remembered as a President whose domestically driven decisions left his country with the least possible opportunity for any kind of grandeur. Blair is clearly in a better position to drive change than in a long time. Yet I gather he will soon realise that things will move a lot slower and not entirely as he envisions them. The East European reaction to his “all or nothing” approach probably wasn’t factored in. A lot will depend on Angela Merkel now. As opposed to 2002, when Germany was in need of an ally because of the Iraq thing and Chirac was able to renew the CAP deal, now Chirac needs a helping hand – but the CDU leadership is clearly more Atlanticist than the current government. I suppose a lot of things are going to happen rather quickly after the German elections. There’s suddenly a lot in play now. Interesting times ahead.

  2. I was refering to the 24 heads of EU member states who aren’t named Tony Blair. But help me out here, because I’m reading conflicting reports.

    Here it says,

    “Britain is isolated, with all 24 other members arguing it is incomparably wealthier than in 1984 and must share the costs to the EU of taking in 10 mainly poor ex-communist states in 2004.”

    Yet
    here it says

    “British officials said four of the 24 other EU member states ? Finland, the Netherlands, Spain and Sweden ? joined Britain in opposing the EU spending plans for 2007-13.”

    And here it says

    “Britain, Finland, the Netherlands, Spain and Sweden voted against the Luxembourg proposal, with the remaining 20 EU members voting in favour.”

    I’m not quite the news junkie that some of you are, but I’ve not seen any other head of government speaking on Blair’s behalf. Am I mistaken?

  3. Now I’m starting to see your sense of humour David :).

    “I’m not quite the news junkie that some of you are, but I’ve not seen any other head of government speaking on Blair’s behalf. Am I mistaken?”

    I think this situation is complicated, as is the Byzantine politiking that lies behind it, so I’m not surprised you are confused.

    I follow it pretty closely, and I am too.

    Five countries were against this, (I think) is a fact.

    Two were against because their payments were too high: Sweden and the Netherlands.

    Sweden also backed Blair on the agricultural subsidies.

    Spain was against because the proposal involved too rapid a reduction in the payment of structural funds to her. Spain strongly favours agricultural subsidies, whilst recognising the need for change.

    Finland, I’m not sure about. I haven’t seen that mentioned.

    All in all it’s a bit like the referendum with the 20 prepared to accept, being prepared to accept for a variety of reasons, and the five against likewise.

    I think you are right in principle in the post: there will now be a drift of people towards Blair (and of course G?ran Perrson :)). At the end of the day he is the only one with a coherent and sustainable position, and this, in the end, may well win out.

  4. Blair doesn?t exactly have support for his approach. Some countries had their own forms of dissatisfaction with the proposed budget; because of the referenda, this budget meeting was more exposed to public scrutiny than most, making politicians more vulnerable to populist misrepresentations in the press. An excellent article by John Lichfield on CAP reform in the Independent today debunks some of the myths that may be effective obfuscation in a tabloid, but are hardly going to work in EU councils, where the following facts will be known:

    EU farm prices are on average only 30 per cent above those in the world market

    Reform of a key flaw in the CAP ? the fact that 50% of the CAP payments go to 5% of recipients ? was blocked by Britain, which has the biggest farms in the EU and thus opposed a move to set a ceiling on single farm payments.

    Agriculture is the only area of public finance which has been largely transferred to the EU. Agricultural spending thus represents about one half of 1% of European countries ? GDP, compared to an average 40%+ of GDP taken by Governments.

    France?s percentage receipt of CAP money is roughly proportional to France?s share of European agricultural output.

    The Poles are pretty unhappy with Blair?s methods if not his aims. Spain can hardly be counted a supporter of the British position. (See http://www.sciencedaily.com/upi/?feed=TopNews&article=UPI-1-20050610-07541200-bc-eu-spain-budget.xml ) Merkel may be vaguely Atlanticist being a traumatised Ossie but CDU regional bosses will limit her scope for action, and she will have to work with the old CDU establishment for some years ? although perhaps, in the end, she?ll fight free of them, as Mrs Thatcher eventually ditched the Tory old guard. The Dutch are simply fed up with being the largest net contributor and see no reason to finance further expansion. In short, Tony?s triumphalism is mostly spin ? he?s good at that.

  5. I think Mr. Montague sums it up best:

    “In short, Tony?s triumphalism is mostly spin ? he?s good at that.”

    Lets hope his “spin” gains traction.

  6. I’ve seen a few people try out a “gotcha” argument regarding Britain’s scuppering of a proposed per-recipient ceiling on CAP payments.

    As ever with Europe, national interest plays a part. The architects of the CAP have in recent years had to cede ground to the advocates of reform. In this context, the emergence of a reform proposal benefiting countries with many small-scale recipients (such as France) at the expense of those with relatively few large recipients (such as Britain) should not surprise us. Neither should Britain’s opposition to the proposal. National governments attempt to shape the system to their national advantage? Shocked, shocked!

    But there is more to British officials’ position than opposition to French self-interest and indulgence of their own. The proposal would cut costs for so long as the structure of farm ownership in Europe remained unchanged. Since the ceiling would establish a strong incentive to split larger holdings into distinct units each eligible for subsidy, costs savings would inexorably shrink. Over the medium term, the effect of the ceiling would not be to cut CAP costs, but to retard consolidation and efficiency gains in the agricultural sector. Across Europe, farmers would invest money, effort and ingenuity responding to an arbitrary change in the subsidy framework. The needs of the real world – including those who consume what farmers produce – would rank far down the list of priorities.

    Those tempted by the “gotcha” approach should ask themselves whether Britain should be expected to support change – any change – even though the proposal in question would (a) undermine the development of an agricultural sector able to realise economies of scale offered by EU integration, (b) recruit new members to the ranks of a politically-entrenched subsidy-dependent special interest group, and (c) cost Britain money, not France. Gaullists would doubtless call this ‘a gesture of European solidarity’ by ‘our British friends’. Others will respond with less hypocrisy, and more sense.

  7. Rob, I had wondered myself how the policy of capping the individual farm payments could be applied in the face of rural cunning. One answer would be to bring the ceiling so far down that subdivision was, as you suggest, uneconomic for the really large enterprises concerned; down to ?200,000 for instance, or lower. It is not the Gaullist RPR that is so keen on this policy, but the Commission and Europe?s Green parties. The funds saved could go to Pillar II rather to an entrenched special interest group.

    The argument against the CAP usually goes that it is uneconomic to allocate so much of the EU budget to a sector like agriculture, that employs a limited percentage of the population. Is it then not altogether weirder to allocate so large a proportion (50%?) of those limited funds to the top 7% of rural recipients, who are hardly in need of social solidarity? Europe does not, after all, need even more mega-farms churning out product at intervention prices, but diversified rural development.

    Perhaps that is the crux ? for some the European project is still understood primarily as solidarity between nations and for others as something desirable between the people of Europe. As far as I?m concerned, the fact that the countryside is the locus of much of the poverty in Europe, especially in the new and candidate member countries, is one of the main arguments for some accelerated ?modulation?.

    And it’s in all our interests to see those markets develop.

  8. As you rightly point out, the capping proposal is an understandable response to an unjustifiable state of affairs. To shoot just one fish in a very full barrel, the Queen of England has received over a million euros in CAP subsidy over the past two years (UK figures available following a successful freedom of information petition).

    My point was a simple one. Regulation can have unexpected and undesirable consequences. Since it cannot be avoided, it should be undertaken with care. In this case, what drives bad outcomes is not rural cunning, but the aggregation of rational responses to incentives within the system. The CAP itself used to provide a defining example of this problem: market intervention justified as a means to ensure “security of supply” created gross and accelerating overproduction.

    Today, the rationale for the CAP has shifted to its welfare function, as you point out. Its approach to subsidy has correspondingly shifted to income support. Yet as reform develops, the danger of perverse incentives nonetheless remains, and should be guarded against.

    In making this narrow point, I perhaps shouldn’t have mentioned the Gaullists. In so doing I touched lightly and too obliquely on a far bigger debate currently gathering steam. Over the coming months, the forces of inertia – particularly as regards the CAP – will be marshalled from the Elysee and the Matignon.

    According to de Villepin: “Do we want to renounce our place as world champions for exports of foodstuffs? We do not have a vocation to flog off our gold medals on every street corner.” One can imagine a similar statement serving as the bitter self-justification of a discredited East German athletics coach.

  9. the positive thing is that there are significant reforms under way, including decoupling of support from output, and more money for the rural developpment side. the downside is that reform is not cutting the overall budget – indeed that has been set in (sand?) stone

    blair has the wind in his sails – and even in france people realise the EU budget structure is crazy – even if chirac won’t say it and the government will fight to the death to defend it

    see also the reports from the conference of european socialist parties – the economic argument is being won by the pro-reformers

    but – what can be accomplished in the short term in the face of de facto institutional opposition from a number of member states that want to defend their cut?

    basically – what is a realistic target for the british presidency – concretely (and don’t say reform…..) ?

    one practical problem i see is that the commission can’t really propose to break the 2002 pact – can’t be seen, I don’t think, to take a stand in the face of the 2002 deal – institutionally it looks very bad – have to be pushed hard.

  10. another issue is the difference in visions which underpins some positions

    some see europe as a rational response to coordination problems etc etc – with advantages depending on the policy area in question

    others see europe more as a political project, in which more common policy is alomst an end in itself – signposts to political integration

    and of course there are shaded of opinion between the two poles

  11. The supposed inviolability of the 2002 agreement strikes me as a non-problem. It was made clear at the time that the deal could be revised both in external fora (Doha) and in internal mid-term reviews. It’s preposterous to claim that a positive reform agenda must as a matter of principle be dismissed without discussion.

    Schroeder was I think among the first to try this claim. At any rate his attempt stood out. At his Berlin press conference alongside Blair a couple of weeks back Schroeder said (quoting from memory but i think accurately) “I have a principle in life, and I think it’s a good one, to keep to the agreements I make.” Blair, as usual when people try to shaft him in public, did nothing grinned and looked mildly shifty. He could though have asked Schroeder to explain how he squared this principle with his conduct on the stability pact.

    It’s Schroeder and Chirac who are the principal blockages on this issue (the Commission will follow a clear lead from the Council). If they try to make a stand on the grounds that the 2002 deal is holy scripture, they’ll be standing on feet of clay.

    The question about the specific form reform will take is a tougher one. It’s another line of attack currently being tried out – Blair is all rhetoric, and he hasn’t put in the work to bring concrete proposals to the table. It’s a strong line, and has the added virtue of being true. We can be sure there’s an effort underway to put that right. We’ll have to see if it’s too little too late.

    For what it’s worth, I think there’s a moral and practical need to put money behind efforts to help poor countries and poor regions. Whether the current thrust of the reformed CAP – bluntly, devising worthwhile ways to pay farmers not to farm – is the right way to go about that is less clear. Fundamentally it will come down to what the defenders of the status quo are prepared to accept. John Montague will likely have a view on that worth listening to.

  12. Rob, well, the 2002 deal is not a problem if enough countries are willing to say – yes, let’s reopen it. My point was simply that the commission itself will probably only follow the Council on this, on which I think we concur.

    I think there is a definite momentum behind the view that more reform is needed. But I’m really not sure what is a feasible target for the British presidency. Its an interesting challenge for the Brits.

  13. You’re right, very interesting. There are at least encouraging signs that the Eastern Europeans aren’t responding to Chirac’s attempts to whistle them to the trough.

    Blair mentioned Sapir by name this morning. Sapir’s report got a very dusty response back in 2003. His main problem was his starting assumption: that the forces of inertia were sincere in signing up to the Lisbon agenda. All his conclusions flowed from that initial mistaken premise. As a result his recommendations were shelved and he quickly became a nonperson in rightthinking quarters. Good for Blair to be pushing his rehabilitation.

    The budget-related part of the Sapir report is worth quoting: (from the executive summary)

    Radical reorganisation of the part of the EU budget reserved for economic activities through three funds:
    – growth fund
    – convergence fund
    – restructuring fund
    This means an important cut to the agricultural expenses and a reduction of the expenses for rural policy in the Member States.

    Clearly, developing a substantial programme of restructuring aid for the east that avoids alienating established recipients will be key. We’re all asking ourselves whether that circle can be squared.

    In my view, a breakthrough needs to target the weak links. They are – one – the British rebate and – two – the CAP, the continuing idiocies of which are well documented. Blair has put the rebate on the table.
    Mr Chirac, those gestures in favour of solidarity you were so wisely recommending …

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