Translate this rhetoric into a political initiative

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Sparring between London and Paris reached new heights yesterday, when Tony Blair issued an open challenge to Jacques Chirac on the need for urgent reform of the EU budget. Where earlier exchanges have smacked of pure posturing, however - Mr Blair laying into the Common Agricultural Policy in response to M. Chirac's calls for a speedy end to the British rebate - the Prime Minister's words in Moscow may have contained the kernel of something more serious.

Sparring between London and Paris reached new heights yesterday, when Tony Blair issued an open challenge to Jacques Chirac on the need for urgent reform of the EU budget. Where earlier exchanges have smacked of pure posturing, however - Mr Blair laying into the Common Agricultural Policy in response to M. Chirac's calls for a speedy end to the British rebate - the Prime Minister's words in Moscow may have contained the kernel of something more serious.

Standing beside Vladimir Putin, Mr Blair said there could be no discussion of the British rebate "unless we discuss the whole financing of the EU, including that 40 per cent of the budget that goes on agriculture which employs only 5 per cent of the people". The message was double-edged. It could signal only that Mr Blair intends to compromise just as little as M. Chirac undoubtedly will when the two men meet today. It could, on the other hand, have been a hint that everything to do with the EU budget - including the rebate - will be in play once Britain assumes the EU presidency next month.

And the truth is that revisiting the massive amounts spent by Europe on farm subsidies - and by the United States, too, which has the equivalent of a CAP in the form of the US Farm Bill - would be rather a good idea. For it is indeed preposterous that so much of the EU budget should be spent on a sector which employs so few. Worse, it is spent in such a way that it does great harm to the poorest people on the planet, the farmers of the Third World, and at great cost to the average European consumer - around £16 a week for the average family of four in taxes and higher food prices.

At one time, there was a point to it. When the policy was conceived in the 1950s, Europe was a very different place, still traumatised by memories of war and hunger. The CAP was intended to guarantee self-sufficiency in food, stability for farmers, and greater agricultural productivity. But after a decade of success, it began to produce surpluses, giving rise to the notorious food mountains of the 1980s. It also took a great toll on the environment, since it encouraged an industrial style of agriculture, high in chemical and energy use. Hundreds of thousands of miles of hedgerow vanished, along with their resident bird and wildlife populations.

But its most devastating impact is in poor parts of the world such as Africa. Cheap food, exported with the aid of subsidies, is dumped in developing countries - often at prices well below what it costs local farmers to produce the same thing. With no alternative means of earning a living, many Africans are left destitute. The CAP deals a double blow, because it also reduces the potential for developing countries to export farm produce to Europe. For years, the average European cow has received almost $2 (£1.10) a day in subsidies - double, grotesquely, the daily income of the average African.

Defenders of the CAP insist that reform is already in train. In 2003, Europe's ministers had what they called a radical rethink which "de-coupled" subsidy from actual food production, and allocated it according to the area of land a farmer held. The changes are being implemented this month. Early projections suggest, however, that production levels will remain largely unchanged. And while, under the rules of the World Trade Organisation, the EU's reform will be judged a success, some $1bn a day will still be spent so that EU, US and Japanese farmers can sell their food cheaply in poor countries. Just as before, too, the bulk of the subsidies will go not to the poorest farmers, but to a handful of agri-businesses. And none of this is due for review until 2013. The best thing Mr Blair could do today would be to translate his rhetorical threat into a real political initiative - and invite France to be the first to sign up.

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