Kohl, Thatcher still at odds over European farm pricing reforms
For the second time in two months, the leaders of the European Common Market are poised for a showdown over plans to reform their community's finances and cut agricultural subsidies. It is uncertain whether the 12 heads of state and government from the European Community (EC) will come to an agreement, which they failed to do at their meeting late last year in Copenhagen.
What is certain is that the stakes are rising, since Britain's Prime Minister Margaret Thatcher refuses to allow a new budget to be passed unless agricultural pricing reforms are made. In fact, the EC is still limping along, nearly six weeks into 1988, on the basis of last year's budget estimates.
There are insufficient funds to allow for inflation, let alone the big budget increases that most members agree are required to help out poorer EC member-nations such as Portugal, Spain, Greece and Ireland. Too, most members agree that farm production and subsidies must come down.
This Brussels summit appears to be a rematch between West German Chancellor Helmut Kohl and Mrs. Thatcher. The other 10 government leaders are urging them to compromise for the sake of the community.
The West Germans are the main defenders of agricultural subsidies. One reason is that German farmers have a grievance unique in the Common Market: Every time the stronger mark is revalued, or other European currencies are devalued, the common farm price system lowers prices paid to German farmers.
The common agricultural policy, as it is known, also puts a tariff wall around European agriculture to protect it from imports and uses the revenues to help finance farm exports.
It is estimated that West German farmers have recently suffered a 17 percent drop in their real income. Thus, Bonn is not prepared to add further burdens by accepting Thatcher's demand for ``meaningful'' cuts in the price of wheat.
In the early days of the Common Market, the small-scale West German farms were already the highest-cost sector of West European agriculture. The EC's common agricultural policy has led to high subsidies for grains and oilseeds - and bulging silos of high-priced agricultural products. The policy also has led to export pressures and trade disputes.
Experts say Mrs. Thatcher thinks that her colleagues will secretly agree with her, whatever noises they have to make this week on behalf of their farmers.
Too, observers say Thatcher also believes her right of veto gives her the power to force through her reform policy, if not in Brussels, then at the next European Community meeting in Hannover, West Germany, which is to be held in June.
All this places West Germany's Chancellor Helmut Kohl in a difficult position, especially as it was he who insisted on postponing a decision in Copenhagen and on calling this special February summit instead, under his own chairmanship.