Common Market Talks Clouded by Farm Subsidy Issue, Other Disputes

Leaders of the 12 European Communities nations met for a two-day summit here Friday with their dream of a frontier-free Western Europe by 1992 clouded by an array of acrimonious disputes.

After more than six hours of discussions in a converted dockside warehouse, there were few signs of agreement on any of the major issues.

Failure to resolve the differences, dominated by the politically delicate problem of containing ballooning agricultural subsidies, could leave the Common Market staring at the prospect of bankruptcy by mid-1988.

Although these subsidies now swallow nearly 70% of the organization’s $55-billion budget and create massive food surpluses, influential farm lobbies in West Germany, France and several other countries have successfully pressured their political leaders to hold off any reductions.

On the other hand, Britain and the Netherlands, where the farm lobbies are weaker, and the Common Market’s administrative arm, the European Commission, have argued strenuously that failure to trim subsidies immediately will perpetuate conditions that border on economic lunacy.

Billions in Subsidies

Last year, the communities spent $18 billion in direct agricultural subsidies to Common Market farmers, then another $6 billion to store the mountainous surpluses of grain, beef, butter and other products generated by the subsidies.

One British official recently calculated that the Common Market is sloshing in enough surplus wine to enable every one of its 321 million citizens to have one bath in it.

The Common Market last year also doled out $9 billion to reimburse farmers who dumped their surpluses into East Bloc and Third World markets at bargain prices. Such dumping has soured the communities’ trade relations and been blamed for undercutting efforts by Third World countries to achieve food self-sufficiency.

The inability of the communities’ leaders to face the task of reducing politically sensitive agricultural subsidies carries many similarities--albeit on a smaller scale--with the reluctance of America’s political leaders to tackle the U.S. budget deficit.

Under the communities’ rules, all 12 nations must agree on major policy changes. All agree something must be done, but a common political will to accomplish it appears to be lacking.

On Friday, the 12 leaders discussed a commission proposal to impose production ceilings for each commodity, above which price cuts would be triggered. However, there appeared little sign of movement toward an accord.

Divisive Issues

In addition to the prickly issue of farm subsidies, the 12 leaders are also divided on other complex but important issues, including budget reform and a proposal to increase funds for developing the communities’ poorer regions.

This move would benefit nations such as Portugal, Spain and Greece but place additional burdens on richer northern members such as Britain, West Germany and France.

British Prime Minister Margaret Thatcher has vowed to block any increase in regional development funds until the farm subsidies question is resolved.

In addition to these differences, the apparent French decision to strike a deal with Iran for the recent relase of two French hostages held by Iranian-backed groups in Lebanon has infuriated Thatcher, adding further to the divisive atmosphere at the meeting.

Outspoken Critic

Thatcher is an outspoken critic of negotiating with terrorists, believing that it encourages hostage-taking.

“It’s going to be a difficult meeting, very difficult,” Danish Prime Minister Poul Schlueter, chairman of the summit, declared even before walking into the first session.

Later, he described Friday’s meeting as “disciplined” and “well-structured” but admitted that little progress had been achieved.

“Whether we succeed tomorrow or not, I don’t know,” he said. “Right now, all problems remain unresolved.”

If the 12 leaders fail to reach agreement today, the problems most likely will percolate until the next summit, scheduled for Hanover, West Germany, next spring. By that time, the communities may be on the brink of bankruptcy.

“The point is what kind of a community do we want,” commission spokesman Claus Ehlermann said after briefing reporters late Friday on the lack of progress. “Is this all a budget exercise, or do we want to lay down the foundations of a European union, which is . . . the goal?”