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Last Updated: Monday, 9 February, 2004, 16:34 GMT
Brussels plans Bulgaria-Romania aid

By Oana Lungescu
BBC Brussels correspondent

The European Commission is set to adopt a financial package worth just over nine billion euros (6.15bn) in actual payments for Romania and Bulgaria in the first few years after their planned admission to the EU in 2007.

The package, of which just over a third will go to Bulgaria and the rest to Romania, includes regional and farm subsidies for the first three years of the countries' EU membership.

The financial package is the key element that should allow Bulgaria and Romania to conclude EU entry talks later this year or early in 2005.

Romanian village
Romania and Bulgaria have large rural populations
It will be adopted by the European Commission on Monday and will be formally presented to the European Parliament on Tuesday, as part of the Commission's overall proposals for the EU's next budget (between 2007-2013).

Romanian foreign minister Mircea Geoana has already described it as a generous package, and there's no doubt that for the two poorest candidate countries, EU regional and farm subsidies will mean a lot of money.

The two countries have a combined population of about 30 million, of which Romania has 22.7 million.

On paper, they will get 15,396 million euros (10,526).

But there is a difference between money committed on paper and the money actually paid out, mainly because of the long delays involved in processing projects and forms.

So, out of over 15 billion euros (10bn) in commitments, Romania and Bulgaria can only expect 9,056 million euros (6,190m) in actual payments over the first three years.

Rural populations

What does that include? First, agriculture.

To keep farm prices for milk, beef and other produce at EU levels, the European Commission proposes 1,120 million euros (765m) between them in commitments.

Bulgaria-Romania finance plan
Poor regions: 8,273m euros
Farming: 1,120m euros
Nuclear safety: 350m euros
Translators: 346m euros
Administration: 82m euros

As for direct payments, the Commission will follow the same principles as for the 10 countries joining now.

Farmers in Bulgaria and Romania will begin by getting 25% of EU levels in 2007, increasing gradually each year so that direct payments would finally reach the same level as in the EU in 2016 - a decade after Bulgaria's and Romania's planned accession.

The Commission assesses the amount of direct payments to the two countries in the first three years at 1,312 million euros (896m).

That may seem discriminatory, as indeed it seemed when it was proposed for the first 10 candidates. But both countries have unusually large rural populations.

Agriculture accounts for about 44% of total employment in Romania, and over 26% in Bulgaria. This is comparable to the 25% of people employed in agriculture in Poland (the biggest country joining the EU in May), but vast compared to EU figures, where less than 5% of the population works on the land.

And in both countries, but particularly in Romania, reform of the farm sector has been painfully slow.

Nuclear safety

The EU has no intention of subsidising a continuation of the current situation, so its focus is not on granting the full amount of direct payments to farmers, but in encouraging the development of rural areas and creating alternative employment.

The biggest item in the package, however, concerns subsidies for poor regions of 8,273 million euros (5,653m) over three years.

Brussels supports the closure of Bulgaria's Kozloduy nuclear plant
To ensure that so much money can actually be absorbed by such poor economies, the European Commission proposes the same principle as it did for the previous wave of enlargement - limiting commitments to a gradually increasing amount of their national GDPs.

The total financial package covers other aspects, including nuclear safety.

To support the closure of the Kozloduy nuclear plant in Bulgaria, the Commission proposes an extra 350 million euros (239m) for 2004-2009.

The Commission also proposes 82 million euros(56m) to support the strengthening of the national administration of the two countries after accession, and assesses it will need to spend some 346 million (236m) to hire extra Romanian and Bulgarian interpreters and translators after the two countries join.

The European Commission follows the model of the previous enlargement in reassuring the two countries that they will not end up worse off after they join than before, and that compensations will be due if they find themselves out of pocket.

Border controls

EU member countries have to make a monthly contribution to the EU budget, but payment of EU funds can be delayed by up to a year for administrative reasons.

There is one important difference, however, from the financial package granted to the first 10 candidates - the absence of a so-called Schengen facility to upgrade border controls, despite the difficulties that both countries encounter in policing their borders with the Balkans and the former Soviet Union.

The other important difference is that, until now, there was no provision in the EU budget for the accession of Bulgaria and Romania and that the richest EU members are already pushing to freeze EU expenditure.

Countries like Sweden, Germany, the Netherlands and Britain are expected to scrutinise the package with great care, especially when it comes to agriculture.

Real negotiations on the package will begin in spring. But the fact is that neither Bulgaria nor Romania have much room for manoeuvre.

Romania faces calls for the suspension of membership talks altogether over international adoption and financial rows, so the approval of the financial package will come as a welcome sign that negotiations are still on track.

And Bulgaria is keen to complete negotiations as fast as it can to avoid being dragged down by Romania or by the tough talks on the shape of the EU's overall future budget that will start later this year.

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