BY CARL-ERIK ISACCSSON
STOCKHOLM, Sweden - Up to 50,000 farmers from across
Europe demonstrated in Brussels, Belgium, February 22, as the
agriculture ministers of European Union member states met
there to begin talks on the European Commission's proposed
changes in the Common Agricultural Policy (CAP). These changes
include big cuts in price subsidies on most agricultural
products produced within the European Union.
After nearly three weeks of debate over their competing interests and how much farmers would accept, the agriculture ministers adopted measures March 11 that fall well short of the original proposals in cutting price supports.
Government officials throughout Europe violence-baited the farm demonstration, including moving a meeting of the EU foreign ministers from Brussels to Luxembourg claiming fears it would be disrupted. Roads, metro stations, and schools around the European Council building were closed. The government deployed about 5,000 gendarmes and police, and the march was under virtual military escort.
Farm protests have picked up from Sweden to France and Ireland in recent months, as farmers are increasingly squeezed by falling commodity prices. Conditions for farmers in some countries are now the worst since the 1930s. Most of the demonstrators in Brussels were from France, Germany, and the Netherlands, but some came from as far away as Italy and Spain.
Many demonstrators expressed concern that the proposed cuts in subsidies would force many more working farmers off the land. Some right-wing groups took part in the action, seeking to promote nationalist demagogy in the name of opposing the EU measures.
The proposed cuts in CAP subsidies are part of the six- year EU budget proposal that is being negotiated under Bonn's chairmanship of the European Union. Under the rubric "Agenda 2000," Bonn and some other EU member states are trying to cut agricultural and regional subsidies to bolster the competitiveness of big business in Europe in relation to their counterparts in the United States, especially prior to the next round of talks on the General Agreement on Tariffs and Trade (GATT).
Their pretext is preparing for taking several new member states from Eastern and Central Europe into EU membership. Bonn and the other dominant powers in the EU are particularly concerned that they not have to guarantee large subsidies to new members.
The budget debate highlights the fracture lines of the European Union. About half of the EU's budget goes to agricultural subsidies, and an additional portion to regional subsidies that are often veiled agricultural supports.
Fracture lines in European Union
It is the capitalist powers in Europe who consider
themselves net contributors to the EU budget - including
Germany, Sweden, Britain - that are pushing the cuts in the
subsidies and demand that they should pay less into the
budget. Paris and other net receivers resist the proposed
changes. This is putting a strain on relations between Bonn
and Paris. German officials are floating a proposal to
"renationalize" much of the agricultural subsidies.
That would make it possible for Bonn to continue paying subsidies to farmers in Germany, while substantially cutting the payments to the European Union. French officials would not discuss it.
Another proposal - supported by all except London - is that the UK government should no longer receive a rebate on EU contributions that Prime Minister Margaret Thatcher negotiated in the 1980s. Still another scheme, agreed upon by the net contributors but opposed by the net receivers, is that if London has a rebate all the net contributors should have it.
Franz Fischler, the EU commissioner for agriculture, had proposed cutting the guaranteed prices that farmers get by as much as 30 percent. The watered-down version adopted March 11 reflects the hesitancy and weakness among the European ruling classes to carry out attacks on the farmers.
The compromise says the guaranteed prices on beef, wheat, and other cereal grains will be lowered in stages by 20 percent between the years 2000 and 2003. Guaranteed prices on milk will be lowered by 15 percent, but only beginning in 2003.
The costs of this agreement will exceed the present annual budget of 40.4 billion euros ($44.4 billion) by 7 billion euros ($7.7 billion) in the years 2000-2006. This compromise will be on the table when the EU heads of government and finance ministers meet in Berlin March 24-25 for final negotiations on the "Agenda 2000" budget.
Weakening of economies and euro
Following a week of deadlocked talks on the agricultural
subsidies, German Chancellor Gerhard Schroder told the
International Herald Tribune February 26 he was worried that
failure to reach an agreement on the EU "reforms" in March in
Berlin could damage the European single currency, the euro.
Since its launch on January 1, the euro has fallen 10 percent
against the U.S. dollar, and the economic outlook is gloomy
across Europe. In the last quarter of 1998 Germany's Gross
Domestic Product shrank 0.4 percent. Unemployment, which Schro
der had promised to reduce, rose from 10.9 to 11.5 percent
after his Social Democratic-Green coalition government came to
power last fall. Economic output is also slowing in Italy,
Britain, Sweden, and Norway.
Finance Minister Oskar Lafontaine, the politician most identified with the left turn in bourgeois politics in Germany, resigned both his government post and his chairmanship of the Social Democrats March 11. He had been demanding the European Central Bank (ECB) cut interest rates, saying a cut was needed to stimulate the economy and avoid a deflationary spiral like that in Japan.. But Wim Duisenberg, the Dutch head of the ECB, rejected this course.
Chancellor Schroder has distanced himself from Lafontaine's economic schemes lately, seeking support from the center-right forces in bourgeois politics in Germany for his policies. Lafontaine's resignation makes it more likely that Bonn will strengthen its relationship with London on economic policy within the EU, while further strain will be put on the relation between Bonn and Paris.
Defense of the euro against the dollar is Duisenberg's main priority, regardless of the unemployment figures. The dollar has been rising on better-than-expected economic growth in the United States since last fall, when the euro project looked strong relative to the dollar. The mantra of the coming euro for a brief time buffered the effects on capitalism in Europe of the deflationary pressures from the crises in Asia and Russia.
The recent wage agreement after warning strikes by hundreds of thousands of metalworkers in Germany included a 3.2 percent wage increase over 14 months, at a time when inflation is zero. The public workers union signed a similar contract, again after warning strikes involving hundreds of thousands. Now bank and commercial employees are demanding 6 percent wage increases, threatening a nationwide strike March 17-20. This labor resistance remains a major pressure against the euro.
British prime minister Anthony Blair committed himself in late February to gear up to rapidly join the euro, assuming it becomes a success. In response an anti-euro block was formed led by a former Chancellor of the Exchequer from the Labor Party Denis Healy, who is now in the House of Lords.
In a TV interview, Healy stated that a recession would require members of the European Union to have different interest rates and exchange rates. "I myself believe that EMU [European Monetary Union] will probably break down before Blair is called on to take a decision whether or not Britain should join," Healy declared.
Carl-Erik Isacsson is a member of the metalworkers union in Sodertalje, Sweden.