The European Union's newest countries may receive a sweet deal to overcome their resistance to a radical sugar reform plan, locking in special compensation payments for likely revenue losses, officials said on Wednesday.
Many of the 10 states that became EU members in 2004 have serious misgivings about the plan, which calls for hefty cuts to minimum sugar and beet prices, as well as production, fearing that their sugar industries will simply be unable to survive.
To cushion the financial pain and offset a planned 42 percent fall in the minimum beet price, farmers would receive 60 percent compensation over two years for their income losses. But that compensation would not apply equally between "old" and "new" Europe, the mostly ex-communist group of countries have complained to the plan's authors: the European Commission.
Eight of the group have opted for a simplified transitional system for their farm subsidies. Only Malta and Slovenia chose the system that was already in force across the old EU-15.
Several of those countries said the sugar compensation aid foreseen in the reform would end up with landowners rather than beet farmers since their chosen flat-rate system distributed subsidies according to areas of land, from a single pot of cash.
The Commission has now offered optional compensation payments solely for beet farmers in the eight countries, which would apply until the end of the simplified scheme in 2008.
"This is to do with the 60 percent compensation. You could have an area payment for sugar producers, keeping that separate to make sure it went to them," one EU diplomat told Reuters.
It could be a useful tactic to win round countries like Poland and Hungary that are highly suspicious of the reform plan, up for debate by EU farm ministers in November.
"You would have the same amount of money but only focus it on beet growers," an EU official said. "It could be a gift from the Commission to make them more flexible - a bargaining tool for November when we're in the crucial negotiations."
Winning around Poland, and Baltic states like Latvia and Lithuania by offering flexibility on compensation would let Brussels chip away at a group of countries opposing the reform.
That group, led by Mediterranean states such as Spain and Italy and backed by Ireland and Finland, has the power to block a deal in November under the EU's weighted voting system.
"It's maybe a way to introduce fragmentation of the blocking minority, and some political flexibility," the official said.
Even though some sceptical governments have begun to identify areas of compromise, opposition to the plan is clear - particularly from some of the larger states in the old EU-15 whose less efficient producers would be hard hit by the cuts.
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