Farmers face loss of CAP grants in EU funding row

IRISH farmers stand to lose part of their income under the latest proposals for funding the European Union for the next eight years.

Taoiseach Bertie Ahern has come out strongly against the plan that would see money earmarked for CAP payments to farmers in 15 member states having to cover those in Bulgaria and Romania when they join in 2007.

Ireland East MEP Mairead McGuinness estimates this would mean a 4% cut in single farm payments at a time when the subsidies have been frozen.

"It is very clear that farmers in the old 15 EU member states are being asked to carry the cost of enlargement," Ms McGuinness said.

The eight-year budget for the EU, estimated at around €900 billion, will be bitterly fought over at the two-day EU summit beginning today in Brussels.

It will be the main topic along with the future of the European constitution, following its rejection by French and Dutch voters.

The €40bn annual CAP budget appeared to be safe following a deal between the French and German leaders three years ago. But the CAP is back on the table after British Prime Minister Tony Blair said he would not contemplate giving up the annual British rebate worth over €5bn this year without reform.

EU President Jean-Claude Juncker yesterday said that all budget matters were all on the table.

As a result the summit appears set to turn into a classic battle between two long-time foes, Mr Blair and French President Jacques Chirac.

French farmers collected over €10bn in 2003 under CAP. Mr Chirac has been adamant the agreement which every country signed two years ago must stand.

In this he is supported by Mr Ahern who said in London yesterday following a meeting with Mr Blair that it would "undermine the credibility" of the European council if it were to reopen negotiations on the CAP.

But several countries, including Britain, Sweden and the Netherlands, want the estimated €8bn needed by farmers in Romania and Bulgaria when they join in 2007 to come from the current CAP.

A compromise deal on the table yesterday was to take €6bn of this from CAP and find the remainder in the general budget.