EU warns new members they must wait 10 years for financial benefits

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Poland and other former Communist countries will have to wait 10 years after joining the European Union before receiving full financial benefits, the European Commission said yesterday when it announced that the first three years of enlargement would cost the EU €40bn (£24bn).

A long-awaited report published yesterday gave the first indication of how the EU intended to finance its ambitious plan to admit up to 10 central and eastern European countries, starting in 2004.

The document has provoked outrage in applicant countries because it suggests that, initially, farmers in the countries joining the EU will receive only a quarter of the direct grants given to farmers in existing EU member states. That will rise to 35 per cent in 2006 but will not reach 100 per cent until 2013.

Almost 80 per cent of the EU's total budget goes towards supporting farmers and subsidising poorer regions.

Diplomats from the applicant countries are concerned that the recommendation from the Commission will further the cause of the growing number of Eurosceptics.

A Polish official said: "How can the government explain to Polish farmers that there are two categories of farmer? How are we going to compete when EU farmers will be getting 100 per cent. Polish farmers are scared to death that they will be driven from the countryside".

Applicant countries will also receive €137 (£84) per head in aid for development, far less than the €231 received by the four poorest EU member states: Spain, Portugal, Greece and Ireland.

The document suggests EU spending on the 10 new countries will be €10.8bn in 2004, €13.4bn in 2005 and €16.0bn in 2006, within the ceilings set by the European heads of government in Berlin in 1999.

Anticipating criticism from the candidate countries, Günter Verheugen,the EU enlargement commissioner, said the proposals were a fair compromise. "This offer strikes the right balance between the expectations of the candidate countries, who will become full members of the European Union, and the budgetary limits of the EU," he said.

Yesterday's paper has not pleased all the existing member states, however, because it implies that spending on the current system of farm subsidies will continue beyond 2006, when the next EU financing deal is negotiated. That has raised alarm in countries that want to reform the expensive Common Agricultural Policy in 2006, including Germany.

Critics argue that by offering farming nations such as Poland the possibility of receiving 100 per cent of subsidies in 2013, the new member states will have a vested interest in opposing reform of the CAP.

Romano Prodi, the Commission's president, said the package was "fair and balanced. From the point of view of member states, concerns that enlargement will lead to uncontrolled increase in financial burdens are allayed."