WINDFALL savings of £3.6 billion in the EU's gigantic farm budgets for 1997-99 should be shared equally between national governments, job creation and infrastructural projects, the Commission proposed yesterday.
In an attempt to put meat on the bones on his "Confidence Pact for Jobs", the Commission President, Mr Jacques Santer, called on member states to back his proposals. These would put some £800 million extra into trans European networks (TENS) including transport, telecommunications and energy; £560 million into research and development; and provide £36 million to assist small and medium sized enterprises (SMEs).
The reallocations will have to be approved unanimously by the member states and the European Parliament but are certain to face hostility from bigger states, including Germany and Britain.
Mr Santer's plan had been well signalled before last week's finance ministers' meeting. The ministers gave it short shrift, preferring to see savings return to national exchequers to help meet the Maastricht convergence criteria. But Mr Santer has substantially sugared the pill by revealing that the farm budget savings are likely to be twice the order expected, due to the success of the GATT reforms and buoyant world markets for food.
Mr Santer hopes that the EU heads of government, meeting in Turin next week for the opening of the Inter Governmental Conference, will see an overriding need to bolster the Union's employment profile. He also hopes to use the Turin summit to promote the Commission's ideas for a treaty chapter on employment.
Yesterday he warned that it was essential to demonstrate to citizens that the Union's central preoccupation is the fight against unemployment. "It is not enough," he said, "to produce White Papers. We have to implement them."
Irish diplomatic sources said the Government will study the proposals carefully. Although savings to the Exchequer (only £20 to £30 million out of £4 billion in the Irish case) might be welcome, Ireland has done well from research spending and reasonably well from the TENS budget.
However, the Department of Agriculture may be concerned that the Commission's predicted savings in the farm budget are based on low take up figures for the rural development programme. Member states had predicted a higher rate of take up than the Commission, whose figures have been substantially vindicated, but the programme has some years to run.
A spokesman for the Commission says, however, that, if anything, the £3.6 billion estimated savings are an underestimate. This is because the hardening of international prices for agricultural products is likely to continue, reducing the cost of price support. Also, the costs of income support - increasingly the focus of the reformed CAP - are easier to predict. Member states, the spokesman argued, are also unlikely to raise the take up of rural development cash because of the cost of matching funds.
As well as the job creation projects, the Commission's proposed reallocation of the savings also includes some £80 million in funding for the already allocated Northern Ireland peace package, £190 million for financial and food aid to the Caucasus and £96 million in additional administrative spending.
