FRANCE and Germany are leading efforts to hold European Union spending on agriculture in a race to meet the Maastricht targets for economic and monetary union next year.
The Franco German campaign has won the support of a majority of member states ahead of a meeting of EU budget ministers in Brussels tomorrow. "This shows how EMU is driving the whole budget process," said a senior Commission official.
Ministers will tomorrow discuss plans to hold the 1997 EU budget at 1996 levels or around 90 billion ECUs (£70.69 billion) a cut in real terms of two billion ECUs.
The aim is to shave a billion ECUs from the 42 billion ECU farm budget and a billion ECUs from 20 billion ECUs in aid to poorer regions.
Britain, Austria, Finland, Italy, the Netherlands and Sweden support the austerity drive, according to a senior EU diplomat.
But the threat to reduce regional aid has provoked concern among net recipients, notably Spain.
These countries are already worried about losing their share of funds when the EU expands membership to the poorer countries of central and eastern Europe around the turn of the century.
Ireland is also likely to be seriously concerned about the impact of any restriction on the EU budget, as we are major net beneficiaries from both farm spending and from structural funds.
Another obstacle to a budget agreement this week centres on the attitude of the European Parliament, which has the last word on "non-obligatory" spending in internal and external policies such as environmental projects.
MEPs would like potential savings on agricultural spending to be allocated to the reserve which is under their control.
At present, the Council of Ministers has the final word on farm spending because it is categorised as "obligatory".
MEPs are also flexing their muscles in order to influence negotiations in the Maastricht treaty review conference the intergovernmental conference particularly their powers over the budget.
The issue at this week's ministerial meeting is whether the Commission can arrange a compromise between the forces of austerity for 1997 and those who want to increase spending in 1998 and 1999 on measures to boost growth and employment.
Mr Detlev Samland, chairman of the parliament's budgetary committee, warned that if there is no upward revision in the financial ceiling for 1998 and 1999, you will get less savings in 1997".
The Commission is walking a fine line. It wants to keep the lid on EU spending to damp expectations of an increase in the EU budget to cope with eastern enlargement.
On the other hand, Mr Jacques Santer, president of the Commission, is still pressing for a commitment to use savings to kick start financing of the trans-European transport networks and EU research and development projects.
All sides concede that the scare over mad cow disease (BSE) could scupper hopes of big budgetary savings.
