Blog post

BLOG - Eurosceptics keep the Agricultural Policy European. For now.

Published on
May 26, 2014

It appears that a number of parties with anti-European leanings are the big winners in the European Parliament elections. In six countries (France, Greece, Italy, the United Kingdom, Austria and Denmark) a eurosceptic party has become number one or two. And in Finland, Austria and Germany (the Alternative for Germany party), parties that believe that it would be a good idea to minimise European cooperation, or even leave the European Union altogether, became members of parliament. It would be a mistake to think that all these parties are the same, or that they all have the same ideas about European cooperation, but the trend is clear.

The Common Agricultural Policy (CAP) and Common Fisheries Policy (CFP) are the policy areas where European integration has been implemented the most. Although the internal market and regulations are much more economically and politically important issues than the EU budget, this does not mean that the flow of European funds is not a potential target. Some parties want to increase the flow of funds, but the eurosceptics prefer to reduce it. A significant portion of the budget - nearly €60 billion per year - is spent on the CAP and CFP. So it's a legitimate question to ask whether the agricultural sector will feel the effects of the election results.

Why are payments from Brussels necessary?

These eurosceptic parties may take the approach of renationalising much of these policies. Take the rural policy, for instance: If fruit growers in Poland want to build new auction rooms, or if the Netherlands wants to build a bicycle path between Harderwijk and Lelystad, these projects could be financed by the region affected. Why are payments from Brussels necessary? Providing financial support from Brussels means that more money is invested in projects like these than would be the case if the users themselves funded them entirely. From a public administration standpoint, it would be reasonable to ask if a voter in Spain (or her representative), for instance, really has enough information to decide on the necessity of subsidising locally desired investments elsewhere. This is an area where the principle of subsidiarity could reasonably be applied. 'Subsidiarity' means that policies should not be decided at a European level if it is more appropriate to address them at a national or local level.

Questions about renationalisation could also be asked in relation to the first pillar of the CAP: Couldn't national authorities decide on the amount of payments per hectare just as effectively as European bodies? Payments already differ per country in the current system, and member states still need to make complex decisions on linking the payments to production or transferring them to rural policy (the second pillar). In recent years Eastern European member states have had the possibility of co-financing payments under EU policy, so that farmers could receive more money than Brussels allotted to them upon accession. The danger, of course, lies in the lack of a good state aid assessment, creating the risk of disruptions to commerce, which would be detrimental to European prosperity.

No effects in the short term

The issue, therefore, is whether the election results will make this type of policy more likely in the coming years and whether businesses will need to take this into account. I do not believe this is the case, for a number of reasons. First of all, it is unlikely that the parties mentioned will be able to transform their election victories into influence in the form of a coalition dominating the European Parliament. An opposition role, in which they will be able to promote the investigation of this type of policy but in which their influence is limited, is more likely.

Any opposition party wanting to curtail the power of the European Parliament will find themselves facing down several different parties. Furthermore, in their opposition role, they will probably be more interested in putting the euro or immigration on the agenda than the Common Agricultural Policy.

Moreover, the CAP has been established for the coming five years, and this Parliament will probably not make any decisions on the policy for after 2020. It would appear that there will be no effects in the short term. But the election results could be a sign that there is a large range of possibilities for the CAP after 2020, because thinking about partial renationalisation is less of a taboo than it used to be.