EU Clears Final Hurdle to Enlargement

European Union leaders agreed on a deal to finance EU enlargement late on Friday, at a two-day meeting in Brussels.

"We have an agreement", Danish Prime Minister Anders Fogh Rasmussen told reporters after two days of hard haggling.

"This has been a very successful summit", he said. "It represents a major step forward towards the historic decision on enlargement".

Leaders agreed to let the EU's farm budget – which stands at around 40 billion euros – swell to 45 billion euros by 2006, increasing by 1 percent per year until 2013 to offset inflation.

In addition, farm subsidies for new member states will be gradually phased in over a period of nine years, and newcomers will receive 23 billion euros in structural aid over the first three years.

"Necessary mandate"

Speaking late on Friday night, Rassmussen said the European Union now had an agreement that gave the European Commission the necessary mandate to finalise negotiations with the 10 candidate countries.

Final negotiations with the countries up for accession by 2004 are due in December.

The ten chosen are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

Rassmussen said he was confident the countries would accept the deal on offer.

Long-standing issue

The main obstacle on an agreement was removed on Thursday, when France and Germany agreed on a compromise over the future of the EU's Common Agricultural Policy (CAP).

Currently, the CAP consumes close to 50 percent of the EU's 95 billion euro annual budget.

Though agricultural subsidies represent only 9.5 billion euro of the overall 42 billion euro proposed annual budget for 2004-2006 to fund the entry of the 10 new members, Germany wanted the aid to be linked to an overall reduction in the EU's agricultural budget. French President Jacques Chirac, however, wanted to extend the EU’s costly Common Agricultural Policy (CAP) after enlargement.

Under the compromise on the long-standing French-German difference over this issue, candidates would receive 25 percent of the direct farm aid received by EU farmers in 2004, increasing to 40 percent in 2007 and by 10 percent annually thereafter.

First relief

The French-German deal was met with relief at the summit, and paved the way for further negotiations among European Union leaders, which led to Friday night's final agreement.

The issue of farming aid was regarded as the main hurdle to an agreement on the financing of EU enlargement. The arrangements will now be put to the ten applicant countries in Copenhagen on Monday.