Battle set to begin for slices of the EC's aid cake: Sarah Lambert and Leonard Doyle on the growing tension over today's negotiations to divide special funds among the Twelve's poorer regions

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'YOU ARE about to witness extraordinary avarice dressed up as moral argument.' That was the cynical view of a diplomat in Brussels yesterday in describing an unusually bitter battle for money among the poorest of the 12 European Community states that begins today.

The rattling of begging bowls by the EC's less privileged countries always upsets the sensibilities of smooth-talking diplomats; but until the enormous disparity between the poorest and the most prosperous regions is corrected, political and monetary union will remain a pipedream in the EC.

So desperate are the poorer member states for funding that Ireland has threatened to wield its veto to prevent Spain and Portugal from getting their hands on the Ir pounds 8.6bn ( pounds 8.4bn) it has been promised by 2000.

The unseemly fight that has erupted between the poorest countries and regions is over the pay-out from a variety of special funds, including the regional fund, the social fund, farm- improvement grants, and a so-called cohesion fund to boost less competitive regions hurt by the Community's vaunted single market.

The overall size of the cake - pounds 132bn by the end of the century - was agreed by EC heads of government in Edinburgh last year. Dividing it up is proving more of a problem as the row between countries with the most severe economic problems of unemployment, emigration and under- development is showing.

Britain, which is also on the list of hardship cases for the first time, is getting money for Merseyside and the Highlands and Islands, on the grounds that these regions are among the poorest in the Community. Northern Ireland already qualifies; Devon, Cornwall, rural Wales and South Yorkshire were turned down.

However, Britain's inclusion comes at the expense of the Abruzzi or Molise regions of Italy, or Flevoland in the Netherlands, and this has caused sore feelings.

The lion's share of the funds - about pounds 87bn of the pounds 132bn - is earmarked for the hardship regions, which include all of Greece, Portugal and Ireland, southern Spain and the southern Italy. Proposed new candidates are the former East German Lander and East Berlin, Cantabria in Spain, Hainault in Belgium, as well as Merseyside and the Highlands and Islands.

The battle is fiercest between Spain, Greece, Portugal and Ireland, which under the Maastricht treaty were guaranteed that their total share of remedial funding, including the cohesion, would double over the period 1992-99.

The Irish Prime Minister, Albert Reynolds, has threatened to block the negotiations to safeguard the money Ireland negotiated in the period 1988- 93. This gave it 13.5 per cent of the available aid even though it accounts for only 7.5 per cent of the population. Which works out at 80 per cent more than average per capita for the Irish from the structural funds; the Spanish, by comparison, get 27 per cent less than the average per capita.

'Every member state has been told to go into the negotiations to fight for more,' said an EC official. 'Only Luxembourg is happy with the proposals put forward by the commission that form the basis of discussions. It is going to be long and tough.'

The commission gives most aid to regions where average income is 75 per cent or less of the EC average. It also helps helps areas seriously affected by industrial decline. In Britain this includes parts of the Midlands, the North, such as Tyne and Wear, Scotland, and Wales.

A third programme helps combat the effects of long-term unemployment and helps integrate young people into the workforce. A fourth prepares workers for industrial change, and a fifth helps to modernise agricultural regions and develop rural areas. Some money is also available for areas suffering a decline in the fishing industry.

France, angered by losing Corsica's hardship status, is also threatening to block any deal unless Belgium is forced to relinquish its new hardship region, Hainault. This borders the French region, Nord/Pas de Calais, which is judged too rich to qualify.

Italy, less efficient than some at drawing up programmes to qualify for regional grants, wants schemes that are still in the pipeline also to qualify for the new money.

Germany, with backing from Britain, insists that the commission should not be able to interfere with the way governments spend the funds. The commission sees this as removing its responsibility to ensure that money reaches its target.

Britain is deeply suspicious of the commission's plans to fund the objectives of unemployment and retraining, fearing it amounts to a Brussels- inspired 'social policy through the backdoor'.

Today's meeting will see a great show of national standards, and some setpiece attacks and retreats; the hand-to-hand fighting will probably come later.

(Photograph omitted)