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I Can See Clearly Now
October 26, 2005 Wall Street Journal

The debate over the European Union budget and its profligate farm subsidies will be reopened when Tony Blair addresses the European Parliament today in Strasbourg and hosts the other 24 EU leaders for a summit in Britain tomorrow.

Last June when Mr. Blair faced off against EU protectionists -- led by (who else?) President Jacques Chirac -- the diplomatic melee helped distract attention from the just-defeated EU constitution. Unfortunately we can't report any movement toward getting a grip on -- much less killing -- the generous Common Agricultural Policy in the four months since then. So the EU's farm handouts keep on wasting billions of euros in taxpayer money, jeopardizing the Doha free trade talks and hurting European competitiveness.

But there is clear progress in one little-noticed area: transparency. Last Thursday -- after much pushing and prodding and not without a fight -- Belgium became the latest EU member state to reveal who gets what from the CAP. Surprise, surprise: The main beneficiaries are large agribusinesses that shouldn't need taxpayer-funded handouts, not those small farmers "struggling to survive" so often cited by subsidy defenders.

Here are some enlightening facts about the €546 million that Belgium divided among 399 recipients last year:

• The largest recipient, Raffinerie Tirlemontoise, a sugar refiner based in Brussels, received €91.9 million -- more than the bottom 378 recipients combined. The RT Group, as the company is also known, is part of the Südzucker AG Group -- which, according to its Web site, is "the biggest sugar group in the European Union."

The Belgian government explained that much of its CAP allotment doesn't end up in Belgium, but is channeled to firms in other EU countries as an export refund. It is distributed through Belgian companies because they do the actual exporting. Even if RT doesn't add the subsidy directly to its bottom line, the subsidy allows the EU to be a net exporter of sugar whereas in a truly free market it would surely be an importer.

• Ninety percent of Belgium's subsidies went to just 29 firms. That includes such mom-and-pop operations as Campina, the European dairy cooperative, which received more than €24.5 million. Just missing the cut for the top 29 were Tate & Lyle (more than €6 million, in addition to the £127 million it received in Britain), BASF (€1.2 million) and Nestlé (just over €1 million).

After our April editorial pointed out Tate & Lyle's hefty CAP take in the U.K., the company wrote us that it "act[s] as the conduit" for subsidies that actually are intended for farmers in poor, developing nations that get special trade treatment by the EU. That, too, may be true. Yet those farmers in former European colonies wouldn't need these subsidies if their products weren't in the first place competing with artificially cheap European sugar dumped on the world market by the Belgian exporters mentioned above. Sending these poor farmers their "aid" through European tributaries also ensures that poorer nations never develop more advanced (and lucrative) capabilities such as refining their own sugar. Instead, they stay dependent on the Continent.

Corporate welfare is not easy to defend when it is exposed to daylight. Hiding it behind the "poor farmer" myth has been an EU deception. Now that the true story is leaking out, it might be time for taxpayer groups to start asking what is going on.

The Continent's politicians aren't likely to stiff-arm their big corporate clients until they face public pressure to do so. Think tanks and journalists did just that in Denmark, Britain and the Netherlands, where CAP recipients already have been named. And Belgian Prime Minister Guy Verhofstadt only ordered the release of his country's CAP recipients list last Thursday after a story in the Flemish weekly Knack raised suspicions.

The new information about the CAP will change the terms of the debate -- which is precisely why European governments are so reluctant to open up their books. The CAP isn't about protecting family farms from big agribusiness; it's about propping up big agribusiness and keeping vested interests, like the farmers' lobby, happy. The EU is in no hurry to shine light on heavily subsidized countries like France, whose CAP recipients profile probably differs little from Belgium or Britain. That would make it even harder for the EU to defend its CAP trough at the ongoing Doha talks.

Transparency might prove to be a powerful tool in persuading Europeans that Doha round objectives are in their own best interests. The Commission could help achieve this positive result by requiring other member states to come clean on who really gets the CAP gravy, where they are based, and how much money they get. That would give EU citizens the information they need to decide whether the CAP should stay or go. The Commission keeps saying that it wants Europe to become more of a participatory democracy. Here's a perfect way.

Croatian American Association
National Treasurer
Daniella Sumera
6607 W. Archer
Chicago, IL 60638