Cash row could delay bigger EU, candidate nations told

Ten countries vying to join the EU in 2004 will today be warned that their accession date could be delayed by three years unless they back down in a row over their financial deal.

With talks on Europe's historic enlargement nearing an end this week, the Danish presidency of the EU will try to resolve the outstanding issues in Brussels before a summit of EU leaders in Copenhagen on Thursday.

Poland, the biggest of the countries expected to join, struck an uncompromising tone this weekend. "We are sticking to our demands for larger farm subsidies and larger budget rebates," the Polish Foreign Minister, Wlodzimierz Cimoszewicz, said after a cabinet meeting on Saturday.

Negotiators have resolved technical problems ranging from demands from Estonia to be able to shoot lynx to the designation of Hungarian apricot brandy. But the Danes have warned applicant states that there is no room to increase their cash offer, which is seen as too generous by the EU's biggest paymaster, Germany.

Denmark has little room for manoeuvre. Its final offer, upped by ¤300m (£192m) last week, is worth ¤1.6bn (£1bn) more for the candidates for 2004-06 than the deal on the table at a summit in October. This has not been formally backed by the 14 other EU countries. Anders Fogh Rasmussen, the Danish Prime Minister, said that while "candidate countries do not feel the money fulfils their expectations", some member states "say the offer is too generous".

In a plea to the 10 nations to temper their demands, Mr Rasmussen added: "I think we have presented a fair offer and I urge them to finalise things on that basis. If they raise their demands too high, then there is a real risk that we won't be able to deliver.

"There is a risk that the whole enlargement process could be in danger. Enlargement could then be postponed for several years, probably until the new EU budget is in place in 2007,'' he said.

Barring a last-minute crisis, this week's Copenhagen summit will admit Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Latvia, Lithuania, Estonia, Malta and Cyprus to the club in 2004. Of these, all but Poland, the Czech Republic, Slovenia and Malta are ready to settle. Warsaw wants up to ¤1bn (£640m) in extra cash and, to complicate matters, any new offer to these four could destabilise the provisional deal with the others.

Denmark's Foreign Minister, Per Stig Moeller, will hold bilateral talks with counterparts from each of the applicant member states in Brussels today. EU ministers will join the discussions tomorrow.

The Poles are sticking to their demands for much higher milk quotas, saying EU plans would force them to slaughter huge numbers of cattle, then import milk. They also want more cash to improve border controls, and a larger lump sum. Although the package agreed in October offers ¤42bn (£27bn) in farm subsidies and regional aid in the first three years of EU membership to new nations, they will be expected to pay around ¤15bn. (£9.6bn). Farmers will initially get only a quarter of the subsidies given to the current EU.

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