ECONOMY

Med states ready to fight over subsidies

BRUSSELS (Reuters) – Five EU states hold the key to the European Union’s next wave of farm reforms and will fight hard to save jobs in poor areas that depend on olive oil, cotton and tobacco, diplomats said late on Thursday. EU ministers, building on principles agreed last June on overhauling cereals and livestock, will next week debate plans to change the subsidy systems for so-called Mediterranean products, dominated by Spain, Greece and Italy. At the heart of the debate will be concerns among the producers about farmers abandoning land due to the decoupling of subsidy payments from production. «The principle of decoupling is accepted. What is at stake is the number of jobs for tobacco and cotton,» one EU official said. «The other main issue is the Spanish quota on olive oil.» Backed by France and Portugal, the group has enough clout under the EU’s complex weighted voting system to block the reform plans authored by EU Farm Commissioner Franz Fischler. The three reforms, along with another plan for hops, will be negotiated as a package. They would enter into force in 2005. But the five-strong group may be slightly weakened at next week’s meeting by domestic politics, diplomats say. Greece has a newly elected minister, Spain’s minister holds a caretaker position after last weekend’s electoral win by the socialist party, and the French minister will not attend due to France’s coming regional elections. Probably the fiercest row will be over tobacco, where the EU has often been criticized for subsidizing growers while spending millions of euros to promote anti-smoking campaigns. Fischler wants a phased removal of the subsidy-output link for tobacco and abolition of national production quotas. Tobacco is of prime importance for Italy and Greece. Both are worried about the idea of total decoupling and want more flexibility for disadvantaged regions – a view shared by France. Spain, Italy and Greece are the world’s top three producers of olive oil. Madrid wants a higher quota to accommodate its increased output.