Schroeder slip-up lets EU off reform hook
Agood compromise, German Chancellor Gerhard Schroeder told his parliament after chairing last week's European Union summit in Berlin, is one which causes pain to everyone.
By that yardstick, the compromise he thrashed out last week with his EU counterparts must have been a bad one. Some countries, particularly newly wealthy Ireland, did leave Berlin licking serious wounds. But most came away from the night's haggling over the once-ambitious Agenda 2000 reforms with a few surface scratches and generous financial balm to help ease any minor discomfort.
The official spin on the result was that EU spending had been 'stabilised', opening the way for 'enlargement' to include new countries in Eastern Europe and the Mediterranean. The EU had proved itself able to act decisively in a time of international crisis and internal constitutional turmoil. Mr Schroeder, meanwhile, had proved his credentials as a statesman.
Certainly, the early, unanimous decision to install the Italian Romano Prodi as the new president of the Brussels Executive Commission, after the embarrassment of the previous scandal-tainted Commission's resignation was a token of the summit's seriousness and effectiveness. So, too, was the agreement, after four years of tough negotiation, on a ground-breaking, 16 billion euro (about HK$133.56 billion) free-trade agreement with South Africa.
The fact decisions on reform were taken at all was a sign of strength, given the depth of disagreement among the 15 members.
Yet the compromise will also have made enlargement more expensive, making it almost inconceivable that Eastern European economies with large, inefficient agricultural sectors and a desperate need for regional aid will be ready to join before 2007.
Mr Schroeder had promised to use Germany's six-month stint in the EU's rotating presidency chair to reform the bloc's finances, cap growth on structural aid to poorer regions and freeze spending on agricultural subsidies at 40.5 billion euros a year until 2006.
Most important of all for his domestic constituency, he planned to slash Germany's 11 billion euro net contribution to the EU budget. That was to be achieved partly by reining in farm and regional spending, and partly by cutting the UK's three billion euro budget rebate, agreed 15 years ago to reduce the burden of membership on Britain's then-struggling economy.
Instead, France, the biggest beneficiary of the EU's agricultural largesse, won postponements and reductions in agricultural reforms previously agreed, arguing that deeper subsidy cuts would cost more in compensation to farmers.
Spain, which takes the lion's share of the regional and structural aid, successfully battled to raise the ceiling on structural funds from a proposed 200 billion euros over seven years, to 213 billion euros.
The UK kept its rebate (with a few minor adjustments), although it remains the second largest net contributor after Germany.
Germany, despite sweeteners such as continued regional aid to technically ineligible East Berlin, ended up with budget relief so limited, Mr Schroeder was unable to put a figure on it. Significantly, what savings there are will come largely as a result of the delays in farm policy reform, and the reduced need for compensation to farmers. The country will remain the paymaster of Europe, although the chancellor claimed the deal set a new downward trend for Germany's contributions.
Perversely, other leaders went out of their way to praise Mr Schroeder's handling of the talks, although their generosity stemmed from relief at the outcome.
Yet the chancellor's lack of stomach for a fight has also been evident in domestic politics, where he has often given away too much too soon and tried to please all the people all of the time. Moreover, his inexperience in EU horse-trading seemed to have let him down.
The chancellor had fallen into the age-old trap of setting himself a deadline and then having to compromise to meet it. He used the need for a show of unity in the face of European divisions over the bombing of Kosovo to pressure his colleagues into agreement even when the talks appeared to be going nowhere. Yet the only European leader giving ground was the man who most passionately wanted a deal for personal glory - none other than Gerhard Schroeder.
Worse, as French sources said their government was only too cynically aware, the chancellor had made the mistake of blatantly using the presidency to further his own national interests and was now having to backtrack to appear more 'community-spirited'. Had he waited, he could have gone in shouting 'I want my money back', as Margaret Thatcher did in the 1980s, without being accused of abusing the presidency.
But the question remains whether Europe really has the stomach to make real reforms and whether Mr Schroeder's partners share the passion for enlargement of the bloc and the sacrifices it will require.
As one French minister is said to have remarked in the run-up to the summit: 'If Germany wants to see the European Union expand eastwards, then Germany had better pay for it.'
