The Celtic Tiger economy will slash Ireland's annual EU structural fund bonanza by as much as 80 per cent by the end of 2006, new funding rules published yesterday make clear.
The European Commission unveiled in Brussels the details of its "Agenda 2000" proposals for internal reform ahead of EU enlargement. The new structural and cohesion fund regulations confirm the Commission's willingness to give Ireland phased reduction or "soft landing" for structural funding.
There are also radical Common Agriculture Policy reform proposals which have angered farmers. Ireland's economic growth has pushed it 15 percentage points above the key figure of 75 per cent of average GDP per capita in the EU, fixed as the eligibility ceiling for maximum grant aid.
Although the precise cash shareout between member-states is yet to be negotiated, and will not be easy, the framework of EU spending priorities for the first half of the next decade is becoming clear.
This should make the framing of the next national development plan possible now, IBEC's European director, Mr Peter Brennan, said yesterday.
But the IFA reacted angrily. Its vice-president, Mr John Dillon, claimed the slashing of intervention prices for beef, cereals and milk would cost Irish farmers some ú300 million a year, or 15 per cent of their net income.
But the figures were trenchantly contested by Commission sources, who said such calculations were based on the most unlikely worse-case scenario.
The Republic's allocation under the current six-year structural fund programme to the year 2000 is ú5 billion. It is also due to receive some ú1.1 billion in cohesion funds targeted at the four poorest countries in preparation for European Monetary and Economic Union. It also gets on average ú1.5 billion a year in farm payments.
In total, in the 25 years of EU membership, that has meant a net contribution to the Exchequer from Brussels of close to ú23 billion.
The Commission's proposals yesterday, if approved by heads of government, will see Irish structural funding declining slowly over the first two years of the next decade and then more dramatically over the following four years to probably less than 20 per cent of what is now received.
Northern Ireland, which received some ú1 billion under the current programme, will also join the Republic in losing eligibility for maximum funding and see a gradual phasing down of its aid. But British sources say they will make a case for excepting the North from the 75 per cent rule if others also press for exceptions.
Cohesion funding to the Republic will continue at its current level until 2004, when it will end.
Farm receipts are likely to fall less dramatically, probably by between ú100 million and ú200 million, depending on the market.
Yet there is still much to play for. Sources close to the Farm Commissioner, Mr Franz Fischler, say he has already acknowledged an Irish case can be made that the reforms hit too hard and that he may be willing to make concessions at the negotiations in the Council of Agriculture Ministers.
But the Regional Affairs Commissioner, Ms Monika Wulf-Mathies, appeared to rule out the possibility, still under consideration in Dublin, of splitting the country into several regions for funding eligibility purposes.
The Commissioner told journalists such a move might be possible if Ireland had some form of regional devolution.
The Commisson's package also proposes a radically new approach to distributing EU aid. It is urging much greater discretion for the member-states and new requirements to involve local communities and the social partners in decision-making.
