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Europe

Putting a Price on Enlargement

The European Union's new East European members will have to wait 10 years before they are granted full access to the bloc's huge farm budget under plans to be unveiled by the European Commission on Wednesday.

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Keeping a lid on subsidies angers candidate countries

Farming promises to be one of the thorniest issues in the whole enlargement process, with many candidates wanting full access to the EU's 40 billion euro-a-year farm budget - around half of all EU spending - immediately on joining.

The EU Commission, however, plans to phase-in direct payments to farmers in candidate countries over 10 years.

Payments would start at 25 percent of amounts existing EU states currently receive, rising to 35 percent by 2006 and going up to 100 percent by 2013.

The subsidies would not depend on what the farmers produce. Rather, the money would be linked to the size of their land for the first three years.

The cost of the first year of European Union enlargement if 10 accession countries join in 2004 will be 5.6bn euro, according to proposals due to be adopted by the European Commission on Wednesday.

Trading horses

The plans have set the stage for decisive bargaining among existing member governments on the terms that should be offered to the East European candidates.

The fact that the proposals do not grant new members immediate full access to direct farm subsidies, will disappoint candidates such as Poland, where the powerful farming lobby could turn public opinion against EU membership.

However, the plans should reassure existing member states such as Germany, the largest net contributor, that enlargement costs will not be excessive.

Poland's European Union negotiators warn that talks on farm policy will be the greatest hurdle to wrapping up a membership deal this year and joining the bloc in 2004.

But Poland faces a mountainous task adapting its bloated and backward rural sector to the demands of the EU's Common Agricultural Policy.

That is worrying other candidates with more efficient farm sectors, like Hungary, which fear that if Poland does not get its act together the whole enlargement process may be in trouble.