- The Washington Times - Saturday, July 6, 2002

European leaders are currently mired in a billion-dollar scheme that is gaining a fraudulent stench. No, this has nothing to do with Enron or WorldCom. Instead, EU farm subsidies, and the noble efforts of some to compost them, are being hotly debated, thanks to the current crop of controversy that EU farm commissioner Franz Fischler has capably sown.

Mr. Fischler has drafted a proposal that envisions the first comprehensive reform to EU subsidies since they were implemented 40 years ago under Europe's Common Agricultural Policy (CAP). Under Mr. Fischler's plan, yearly subsidies, which total $43 billion, wouldn't be reduced for at least the next three years. But farmers would receive no more than $297,000 in subsidies, and direct payoffs would be reduced 3 percent per year over six to seven years. Also, subsidies would no longer be linked with production and would instead reward adherence to food safety, animal treatment and environmental standards. This aspect of the proposal is important, because the current system has prompted some farmers to falsify their yield numbers, a la Enron, and caused gluts in the marketplace, hurting farmers abroad.

The plan is still subject to the approval of the European Union's 15 members. Despite its reasonable recommendations, it has generated a bitter backlash and is not expected to pass in its current form. France, which receives the lion's share of subsidies, has rejected the recommendations. British Prime Minister Tony Blair has developed quite a foot-in-mouth problem when it comes to the subsidies. At the meeting of Group of Eight developed countries in the Canadian Rockies last week, Mr. Blair made a politically valiant call for reining in the subsidies: "We have committed ourselves to phasing out the agricultural subsidies that keep African goods out of our markets."

Now that Mr. Fischler has proposed actual subsidy reform, though, the Blair administration has backtracked, due to its concerns about the ceiling on the subsidies to farmers. After all, about 600 English farms are slated to receive more than $297,000 in direct subsidies, and the Fischler reform would collectively cost English farmers millions of dollars in foregone funds. The Irish Farmers' Association has said it will fight the proposal "tooth and nail."

All the same, the union has vested interests in making changes before 2004. By then, the union is expected to usher in 10 new members, which would increase the number of farmers in the union by half and put considerable strain on the union's finances. And the plan does have its staunch proponents. "Its three-letter acronym is a byword for greed, waste, inefficiency and fraud and to make matters worse the EU's creaking 27 billion pounds a year common-agricultural policy (or CAP) is jealously protected by the country it benefits most: France," the Guardian editorialized Monday. "Each year sees new increasingly surreal revelations about phantom olive trees, exaggerated milk quotas and fields of crops which exist only on paper."

Sound familiar? The EU farm subsidy controversy may grow to be just as contentious as America's serial corporate-fraud debacle. Europe has proved just how chaotic farm subsidies can become a parable America, with its own mounting farm subsidies, should watch warily.

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