'Old Europe' must reform or crumble, Blair warns leaders

PEOPLE throughout Europe will carry on rebuffing their leaders unless the European Union changes its priorities and cuts agricultural spending, Tony Blair declared last night.

After tough talks with President Chirac in Paris the Prime Minister raised the stakes before tomorrow’s Brussels summit by linking the two issues that have brought the Union into crisis — the budget and the constitution.

Mr Blair, objecting strongly to the EU deciding collectively to put 40 per cent of its budget into agriculture where only 2 per cent of its people were employed, said that it was difficult to see how differences could be bridged this week.

The Prime Minister challenged “old Europe” by saying that the Franco-German partnership could no longer be the motor for running the Union.

“If we want to reconnect people in Europe with the idea of the EU then we have to set a new political direction and reconnect the priorities which the people have with the way we spend money in Europe,” Mr Blair said.

Despite signs that Britain may be prepared to exempt the EU’s poorer members from contributing to its £3 billion annual rebate, Mr Blair repeated that it could not be removed without a fundamental reappraisal of all the EU’s spending priorities. It would not be given away for a “slapped-together deal that does not work”.

Mr Blair said that the summit should agree a lengthy pause in ratifying the constitution, already rejected by France and the Netherlands, while the EU sought a new and dynamic direction. He has allies in this — it emerged yesterday that the Netherlands and Sweden are backing his calls for a shakeup of the Common Agricultural Policy.

Mr Blair disagrees with M Chirac and Gerhard Schröder, the German Chancellor, over whether the 2002 deal which set CAP spending to 2013 can be reopened. He says it is impossible to envisage the reappraisal he wants without touching the CAP and senior British ministers are pointing out that under Paragraph 12 of the 2002 agreement the CAP settlement can be reopened as part of the current budget negotiations.

After an hour of private discussion with M Chirac, Mr Blair admitted “sharp” disagreements over the budget and sought to shift attention back to France’s rejection of the constitution. He concluded: “Let’s be honest — if there was a referendum in most parts of Europe at the moment, the answer would be ‘no’.

“The response should be to concentrate on issues of how we spend European money, the response should be to reconnect the priorities of the EU with the priorities of the people of Europe.”

M Chirac was in no mood to back down. A spokesman said he told the Prime Minister: “In the situation of political crisis now affecting Europe, it is important that we do not add financial difficulties.” There was no joint press briefing of the sort that traditionally follows such mini-summits between EU leaders.

Mr Blair demanded changes to the way the EU is run. “It’s got to be run on a different basis. We need a strong Europe, but it’s got to be a strong Europe of the right kind. The Franco-German relationship is very important but it cannot comprise all of what now drives Europe forward,” he said.

Last night Mr Blair addressed the French people on the evening news on TF1, the most-watched television channel. He defended the British economic system, which was held up as the unattractive future of Europe during France’s referendum campaign.

“We have tried to find another way to combine social solidarity with an economy that is very competitive,” he said.

His appearance in stumbling French was described by one woman viewer as “pure Hugh Grant, all apologies and self deprecation”.

We should remember that although one speaks of the EU of being 25 countries, not all of the countries are very big, and France is by far the largest agricultural producer and exporter, and has about a quarter of all of the farms in the EU. If there is an agricultural policy at all, then, France will inevitably get the biggest chunk of the benefits, because France is by orders of magnitude the biggest agricultural producer.

Turn the tables a little bit, and make there be a "common chocolate producer policy", and all of a sudden the Belgians would have the largest proportion of the benefits, since they produce huge amounts of chocolate.

It is a bit disingenuous, therefore, for critics of the PAC to point to the fact that France gets thrice what Britain does, and therefore that things are monstrously unfair. France has thrice the farmland of Britain, so of course France will get more in absolute amounts paid.

All of that said, the PAC is inefficient, and it does not help France (or any other country) innovate. France is the world's best garden, having the best agricultural land in Europe, also the most varied, but also in the world. There is vast experience in practically every form of crop, and French farmers know what they are doing. The incentive payments are strange and they badly skew the market. What is needed is protection against lower quality non-EU goods, or frankenstein foods from the US that European people do not want. The market can settle out WHAT gets grown better than planning targets, missing what is grown, and ending up paying for waste.

Agricultural reform in France would be the entrepreneurial base from which things could move out into the rest of the society. The French know agriculture. They are masters of it. Pull away the artificial props, and some farms will fail. But the larger and more agile producers will not, and they will do quite well. More importantly, because this is not a unionized sector, and is quite individualistic in control, you have the prospect of economic dynamism coming from the COUNTRYSIDE, which has long been dormant. And, given the over-representation of the provinces in the political structure, what works well for the farmers, in terms of private enterprise and entrepreneurial choice, will end up being imposed by the agricultural sector, of all places, on the rest of France.

Another French paradox, that farming, the most ancient, old and conservative industry could very well provide the impetus that reforms the rest of the business culture!

Therefore, we must hope that M. Blair holds the line here.

Chi-chi is hopeless. He should retire but he simply cannot. And that is probably good to, because it will cork the bottle and allow pressure and frustration to build and explode. France is a nation of rigidities. All is rigid and set, and things change only by violently rewriting everything.

Peasants with pitchforks may well prod France into the modern world. How wonderful! And how appropriate for France too, because this is the sector that has no pretensions, that everyone appreciates but nobody looks up to. Bove has such credibility as he does precisely because he is a nobody, and not a person of status. Were he a simple urbain, nobody would pay any attention to him.

"What is needed is protection against lower quality non-EU goods..."

As a member of the WTO, it is going to become a challenge for France to keep out "lower quality non-EU goods" as more governments sue on behalf of their farmers. Despite the bluster, many farmers outside of France also "know what they are doing" in regards to growing things. This pressure from outside is going to increase over time and it may be that France ends up on the wrong end of these rulings. It will be interesting to see.

This is in addition to cheaper, higher-quality EU goods being grown elsewhere in the trading block. Correct me if I am wrong, but by treaty, France cannot keep these goods out. As members of the EU, any one of the 25 have the right to sell anywhere in the block, correct?

"This is in addition to cheaper, higher-quality EU goods being grown elsewhere in the trading block. Correct me if I am wrong, but by treaty, France cannot keep these goods out. As members of the EU, any one of the 25 have the right to sell anywhere in the block, correct?"

Certainly goods cannot generally be kept out between EU countries, other than as necessary for public health reasons. (E.g.: France and other continental European countries barred imports of British beef during the Mad Cow disease epidemic, for legitimate public health reasons.)

In the field of agriculture, France competes well within Europe. With far more arable land, of the highest quality, and a varied climate, France produces all crops grown in Europe. No other nation is able to do so. Also, French farms are quite large and mechanized (and therefore efficient), by European standards. British farms are, on average, larger, but there is a more narrow range of crops in Britain. Obviously the British are going to have to continue to import their wine and olive oil, for instance.

Also, France includes several tropical islands in the Caribbean and Indian Ocean, so tropical fruits and sugar cane are domestic French crops. This is not true of any other European country.

In a free agricultural market limited to Europe, France is very competitive. Let French agriculture adjust itself properly to a free market by revising the PAC to be a gradual retirement benefit for small and inefficient farmers, most of whom are old, to retire from the business, and French farms will grow from their average 48 hectare size (as contrasted with Britain's 72 hectare average) to larger farms, but the variety and quality will remain high.

We should remember that the Eastern Europeans, although they do indeed grow crops cheaply, do so quite inefficiently (from the perspective of the individual farmers), with farmers in abject poverty in many instances, and dairy quality being so low as to be unexportable. Beyond that, the Eastern Europeans are heavily dependent on French seeds. The seed-crop producing industry in Europe is primarily France. So, the French produce most of the seeds and hybrids which the farmers of the rest of Europe then use to grow the consumable crops.

Size gives an economy of scale advantage in all industries, and when it comes to farming in Europe, the French have that advantage naturally, because of the sheer size and arability of France (France is very large compared to the other countries of the EU, and has much, much more arable land and the best climate.) Agriculture is one of France's best natural niches. It is not surprising, given the governmental orientation of European thinkers, that the primary economic expenditures of the EU are on agriculture, and that France has been the primary beneficiary. But the shaking out of a freer agricultural market in Europe will favor the largest and most diverse producer economies. And that is France.

France has nothing to fear from fair competition in agriculture in Europe. France, and all European countries, does need to fear the pain of the transition. The PAC can be used to ease the small, unproductive, struggling holdings, which make up perhaps 20% of the farming workforce but have only 3% of the land, into retirement. That is a reasonable phase out of the PAC. But the productive element of the agricultural sector should be more unfettered. The residual PAC can amount to a limited form of crop insurance against disaster or severe market shifts in the course of a single year.
But the current, heavily regulated and cumbersome system, which is quite similar to the American model (on which it was based) is not the way of the future.

M. Blair is bringing this to a head.

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