EC MINISTERS LIKELY TO CRITICISE FINANCE IDEAS
Plans for a new-style European
Community (EC) free of damaging budget wrangles receive their
first full review from EC foreign ministers today, but are
unlikely to gather much support.
    Diplomats said key EC capitals would voice strong criticism
of proposals that would lead to a sharp increase in EC budget
payments by bringing member states" contributions more into line
with national wealth.
    They said the EC"s current paymasters, Britain, France, and
West Germany, would lead the opposition to the plans, designed
to enable the community meet the challenges of the 1990s.
    Faced with a budget deficit this year of at least five
billion dlrs, EC Commission President Jacques Delors called in
February for a radical overhaul of the EC financing system.
    Such action was necessary, he argued, to end a damaging
cycle of annual budget crises and ensure cash for technological
research programs and regional and social spending projects.
    Ironically, diplomats said, the move could spark exactly
the type of row it was intended to avoid with industrially
developed northern states demanding assurances the new cash
would not be swallowed up by the poorer southern members.
    Delors" plans, by linking a country"s contributions to its
Gross National Product (GNP), would over the next five years
add some 18 billion dlrs to the present budget of 34 billion.
    Currently, contributions are calculated on a percentage of
Value Added Tax (VAT) returns.
    Under the new scheme, all countries would pay one pct of
their VAT receipts to Brussels. Extra cash would then be raised
in line with needs by a levy on the difference between a
country"s total VAT receipts and its GNP.
    London is one of the most resolutely opposed countries to
the scheme, arguing instead that money should be made available
from deep cutbacks in the EC"s heavily-subsidised farm sector.
    Unofficially many EC capitals secretly support the
wearisome budget wrangling, taking the line that the highly
diverse 12-nation Community can only take tough decisions when
forced to do so.
    The issue is further complicated by a possible general
election in Britain and acceptance that the EC problems cannot
seriously be addressed by London until those polls are out of
the way.
 REUTER
