Luxembourg takes over the reigns of presidential power

THREE TIMES a year – in April, June and October – farm ministers, civil servants and other hangers on decamp from their usual meeting rooms in Brussels and reconvene in Luxembourg for their monthly council session.

It”s a strange place, Luxembourg, enjoying the architectural splendour of many a European capital, but with the life and soul of the average morgue.

That”s certainly the impression one gets, wandering the deserted streets past empty shops and restaurants after some less than riveting council debate on olive oil reform, animal by-product regulations or pesticide residue limits.

A quick glance at the tourist information website also confirms that Luxembourg really is pretty dull.

Its list of “sporting greats” includes world billiards champion Fonsy Grethen and sea angler Pierre Zirves. Its greatest invention is the Tudor Accumulator – “the world”s first lead storage battery”.

Not surprisingly, it”s also the smallest country in Europe, measuring just 50 miles by 30.

But size isn”t everything, and when it comes to EU politics, everyone is entitled to a share of the limelight. And so it is that the tiny Duchy of Luxembourg now holds the EU presidency and will be guiding the passage of a number of key dossiers for the next six months.

None of these is more important than the rural development package, tabled by the Commission last July with the aim of making the policy “simpler, broader and better”.

The proposal sets out three “priority axes” for the period 2007 to 2013. Axis one is designed to increase the EU”s competitiveness, axis two to protect the environment and axis three to improve the quality of rural life. The commission has suggested minimum spending commitments of 15%, 25% and 15% of the total budget for each axis.

But this has drawn heavy criticism from member states, and Luxembourg agriculture minister Fernand Boden plans to publish a new proposal in early January which should reduce these amounts substantially.

The other contentious issue is the definition of “less favoured areas”, with some member states very concerned about plans to remove the socio-economic criteria for granting LFA status. This too could be re-examined.

The Luxembourg presidency aims to reach a general agreement on rural development in March or April, setting out the range of policy instruments that will be available under each axis. But the actual level of funding, and the shareout of cash between member states, will not be decided until later, as part of the other big dossier on Luxembourg”s plate, the financial perspectives for 2007-2013.

Commission plans, launched last July, call for a 30% increase in EU spending to 158bn (110bn) by 2013. The amount for direct supports to farmers comes to about 43bn (30bn) a year, as fixed by heads of state in 2002. But the amount for rural development is still up for grabs, with the commission pitching for 13.2bn (9bn) by 2013.

This will be subject to tough negotiation, with net contributor countries such as the UK and Germany looking to cut EU spending to just 1% of gross national income, compared with the commission”s plan for 1.14%. The aim is for a political agreement by June.

The third big issue for the Luxembourg presidency will be reform of the sugar regime, where the commission has called for a 33% price cut and a 17% quota cut, to help reduce the EU”s dependence on subsidised exports. Under the plans, growers will be entitled to 60% compensation, funds will be available for factory closures and quotas may be traded internationally.

In retrospect, Luxembourg might actually become rather interesting, for the next few months at least.