After a day of waiting around and frantic bilateral meetings, it was deep disappointment for Ireland last night when the German EU presidency produced a compromise package. In all three key priority areas to Ireland - transition arrangements, Cohesion funding and farm spending - Irish officials were expressing disappointment. They were not alone among member-states.
It was a sign that the talks would go on long and hard into the night. Cuts in EU farm spending, which are expected to cost Irish farmers around £100 million over seven years, are now expected by diplomats to be part of the final agreement by EU leaders on Agenda 2000.
Irish ambitions to minimise the cuts in structural and cohesion funding took a hammering with the insistence in the latest German presidency compromise proposal that the ceiling on spending on both areas should be capped at some €210 billion, a full €29 billion less than the Commission proposed in Agenda 2000.
Ireland has regarded the structural fund proposals in Agenda 2000 as its bottom line in the negotiations and yet the German Cohesion Fund compromise proposal suggested a cut of over a quarter in the size of the fund, a crucial source of infrastructural investment in Ireland that has brought in some £200 million a year. Ireland could expect only some £150 million a year on current proposals.
Even more disappointing is the level of spending proposed for regions in transition from Objective 1 status. The proposed allocation of only €11 billion to regions covering some 40 million people means that the east and the south of Ireland would almost certainly receive less than £1 billion in funding.
Put together, such figures represent a figure well short of £3 billion for Ireland over seven years. In the current six-year programme, Ireland is expected to receive £6.5 billion.
Having adjourned their plenary session almost immediately after it opened yesterday morning, ministers were only able to reconvene at 9 p.m. following a long series of what were described as difficult bilateral meetings with the presidency.
The farm cutbacks are likely to come in the form of "degressivity" or the successive annual paring back of direct aid compensation payments to farmers, the "cheque in the post". They are seen as necessary by a majority of member-states because the CAP agreement reached by ministers 10 days ago overran the broadly agreed budget by some £5 billion.
But with Irish farmers coming out of the original deal relatively unscathed, further cuts of this order are unlikely to cause huge problems. The German presidency yesterday morning tabled two alternative compromise proposals on the farm package, effectively a choice of reform at a price or the postponement of reform with consequent savings.
Last night, in a move to combine aspects of both proposals, the Germans are understood to have put proposals for degressive cuts in direct aid to farmers of 1.5 per cent in cereals and 0.50 per cent in beef, with the postponement of milk reform by one year. There was little sign that France had softened its approach to the farm package, which President Jacques Chirac still refers to as merely "a proposal". But some diplomats say Mr Chirac, who has prided himself on his connections with rural France, is at odds with his more moderate Socialist Prime Minister, Mr Lionel Jospin, over the deal. The Irish were still adamant that the savings needed in the overspend of 2.3 per cent of the budget could be met through prudent management of the budget.
Meanwhile, the British seemed last night to be hinting at a formula for solving their dispute with their 14 partners over the exclusively British rebate on their contributions. Mr Alistair Campbell, the spokesman for the British Prime Minister, spoke of the acceptance by the British that they should not benefit from windfall gains arising from changes in the way budgets are allocated and paid for.
A change by the EU to a contributions system based on GNP, rather than GNP and VAT receipts, would provide the UK with significant savings, as would the transfer of spending from external accounts to internal accounts when new member-states join. Those windfall gains, Mr Campbell hinted, could be used to reduce the British rebate. A formula along those lines appeared in the compromise package.
