By Tito Drago
MADRID, Mar 18 1998 (IPS)

Differences between the industrialised North and the less developed South are also present within the European Union (EU), a reform of the bloc’s agricultural subsidy programme illustrated Wednesday.

Some 20,000 farmers gathered Wednesday in front of Spain’s Ministry of Agriculture to protest the decision adopted a few hours earlier by the EU Council of Commissioners.

Olive-growers from less developed areas of Spain protested the reform of the bloc’s agrarian policy, which reduces subsidies for the production of olives and olive oil.

The Council of Commissioners decided to freeze EU subsidies for olive oil and wine. Spain’s Manuel Marin and Marcelino Oreja and Portugal’s Joao de Deus Pinheiro voted against the decision, which also reduced assistance to fruit and vegetable producers. The measure will affect southern European countries.

But the debate goes above and beyond the interests of olive growers, wine producers or ranchers.

The bigger question is whether Europe’s richest countries should continue providing funds to promote the development of the rest, and of their own most backward regions.

Spain, Portugal and Greece want the so-called “cohesion funds” to be maintained, while Britain, Germany and the Netherlands are seeking their reformulation.

In a letter to the president of the European Commission, Jacques Santer, Finance Minister Gerrit Zalm from the Netherlands demanded something similar to a concession won by Britain in 1985: a check reimbursing part of its contribution to the EU budget. Germany said it may follow suit.

On Wednesday, the commissioners approved the agricultural subsidy programme for the 2000-2006 period. The plan displaces funds towards Europe’s most industrialised countries, in spite of the fact that the very existence of subsidies erects a barrier against products from developing countries in the rest of the world.

The budget for the subsidies – and the price for European cohesion – will total 700 billion dollars in that period, half of which will go to the agricultural sector, and the other half to the infrastructure and cohesion funds which mainly finance works of infrastructure in the bloc’s least developed regions.

But the Council of Commissioners decided to freeze aid to olive farmers as well as assistance to the producers of wine and tobacco. It also cut subsidies to fruit and vegetable farmers by 2.5 percent.

Production of all those products is concentrated in the countries of southern Europe – Spain, Portugal, Greece and Italy.

On the other hand, subsidies for grains were increased by 14.2 percent, milk (63.7 percent), and beef (68.7 percent), key sectors in Europe’s most industrialised countries.

With respect to olive oil, meanwhile, the countries of southern Europe are split. Spain produces close to one million tonnes of olive oil, but will receive subsidies for only 600,000 tonnes, while Greece, Portugal and Italy will receive similar or larger subsidies for their total production.

The resolution of the Council of Commissioners is still pending decisions by the Council of EU Agriculture Ministers and the European Parliament.

Spain’s Minister of Agriculture, Loyola de Palacios, said Wednesday that her country might appeal the veto to force a decision more favourable to Spain. Although the measures on subsidies, and particularly those referring to olives, cannot be vetoed because they are decided by a simple majority, Spain could veto other resolutions, indispensable for EU functioning, as a pressure tactic.

The minister has been critised by Spain’s olive growers for having failed to get their demands met. But she has their support for any kind of pressure within the EU.

“We will fight in Brussels to the bitter end,” said De Palacio – without explaining just what that end might be.

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