ECONOMY

Commission appears unyielding on reducing tobacco subsidies

The European Commission appears determined and unyielding on the issue of changing the subsidy regime for tobacco, one day ahead of a critical meeting of EU agriculture ministers that is expected to overhaul subsidies for the so-called «Mediterranean products,» that is, cotton, olive oil, sugar and tobacco. A spokesperson for European Agriculture Commissioner Franz Fischler said yesterday that there can be no way to prevent the «decoupling» of the subsidy from the amount produced, but added that the Commission could accept a delay in implementing the changes. Fischler himself believes his proposed changes As with other agricultural products, the Commission wants to shift subsidies to income support for the poorest farmers and to encourage the environmentally friendly production of products according to market needs. Subsidies to the biggest farmers will be capped. An agreement concerning cereals and livestock was reached in June. In a speech at a recent conference in Italy, Fischler remarked that there is, on the one hand, strong political pressure and also decisions made toward distancing the Common Agricultural Policy from a proven lethal product, such as tobacco. On the other hand, he said he believed the sector itself has entered a phase of structural and irreversible decline. Continuing the existing subsidy regime on tobacco was a «delusion,» according to Fischler. The agreement, last year, to protract the present regime until the end of 2004 was conditional on radical changes being introduced in 2005, Fischler said. The only hope of governments, such as those of Greece and Italy which would favor continuing linking subsidies to production, is to make it a political issue. According to some Brussels officials, tobacco looks likely to be the trickiest sector to sort out, as any reform there will affect thousands of workers in some of Europe’s poorest areas. Producers say Fischler’s plans threaten to ruin rural economies and cause thousands of job losses. «Tobacco is the most difficult about levels of decoupling. Olive oil has largely been sorted out, cotton is tiny but it’s still symbolic on the world stage,» a European Union diplomat said. Fischler wants all tobacco subsidies to be split from output, and phased over two years from 2005. Quotas limiting subsidized production would eventually be scrapped. Ranged against the producers are northern countries such as Sweden, Germany, Britain and Denmark, who oppose subsidizing tobacco growing on health and ideological grounds and will fight hard for a complete decoupling to discourage more production. «Italy has sent out signals saying tobacco is of enormous importance for them,» the diplomat said. As has Greece, most recently at a meeting last week between Fischler and Agricultural Development and Food Minister Savvas Tsitouridis. Tsitouridis, who was recently installed as minister following conservative New Democracy’s victory in the polls last month, had been one of the most vocal critics of the previous Socialist government’s agricultural policies. He had denounced last year the agreement on cereals, saying that his predecessor, Giorgos Drys, had «capitulated» in not insisting on the links between production and subsidies. In their meeting, however, Fischler curtly dismissed his objections, leading Tsitouridis to declare that Greece was not ready to accept the Commission’s proposals. The diplomat’s aforementioned assessment that the cotton issue is «tiny» does not mean that Greece, which accounts for 80 percent of the EU’s cotton production, does not have a fight on its hands. On the contrary, it may have fewer allies on this particular issue.