European Community braces for the battle of the budget

Some 5,000 angry, shouting farmers demonstrated outside the European Parliament this past week and burned the British Union Jack. They were just one indication of the emotionalism the nine countries will have to contend with in trying to resolve their controversy with Great Britain in the coming weeks.

The farmers, agitating for higher prices for their products, were taking out their frustrations against the country whose demands in recent months have focused increasing attention on the dwindling budget resources of the European community (EC).

After one summit failure four months ago and after having veered away from a second futile meeting this week, the EC has begun laying the groundwork for another high-level gathering in late April.

It is hoped this third attempt may come to grips with the critical issue of Britain's contribution to the joint community budget. (London has been protesting that although it is one of the poorest countries in the EC, it is the largest net contributor to the EC budget.)

The political maneuvering and jockeying have already begun in preparation for the tentative April summit. Until then, the community will look for ways to narrow the gap between the $2.1 billion EC budget deficit the British government has said it wants offset and the $800 million proposed by the eight other members and rejected at the Dublin summit in November.

Debates over increases in farm spending and over restricted British lamb imports into France have complicated the negotiations on the British budget contribution. One French farmer at the Parliament demonstration a few days ago carried a banner proclaiming, "They got our shepherdess [referring to the British burning of Joan of Arc centuries ago] but they won't get our lamb."

The issue of lamb shipments and the size of farm price and budget increases, although seemingly far removed, are actually fundamental to the British budget problem, which has undermined community relations for months. Many inside the EC have reasoned that they key to correcting the lopsided British contribution is to limit the EC agricultural programs, which dominate the joint EC budget and from which Britain gets hardly any return.

The EC's executive commission in Brussels has proposed a ceiling on farm prices this year and the creation of special funds or projects that would directly benefit Britain. But most other governments want more than nominal price increases for their farmers.

And France is demanding a special new fund to aid its lamb farmers against low-cost British lamb which, up to now, it has restricted in violation of court orders.

Before the Brussels summit was postponed, France was also insisting that all these interconnected issues be considered and resolved along with the British budget dilemna. This prospect virtually doomed the summit from the start and was more of a reason for its postponement than the pretext of the Italian government crisis.

The inability of the Dublin and now the aborted Brussels summit to resolve these issues has been accompanied by other EC institutional breakdowns in recent weeks. Neither the summits, the regular ministerial meetings, the executive commission, the parliament, nor the court has been able to narrow the national governments' differences in this dispute.

New contacts are under way to try to hammer out a solution before the next summit, but one source said it would be a "miracle" if a way were found out of the impasse by then.

The key to the solution may be German Chancellor Helmut Schmidt, who has been meeting with British Prime Minister Margaret Thatcher and has a close personal working relationship with the other main protagonist, French President Valery Giscard d'Estaing.

Chancellor Schmidt and other German officials have said they would go along with whatever the other countries could agree on. But there have been increasing reports of German irritation with the shifting British tactics in this debate.

These have vacillated between Mrs. Thatcher's generally acerbic declarations and much more conciliatory statements from other members of the British government.

The German Chancellor is said to be extremely anxious to avoid a European crisis at a time when Western solidarity is being tested by the aftermath of the Soviet military intervention in Afghanistan. He is felt to be the only European leader with enough international and domestic prestige to reconcile the warring British and French.

The basis for such a solution, according to one high British official, might be recent EC executive commission proposals to channel more EC funds for British coal, transportation, and other projects, and cut down the British contribution to the EC budget.

This outline proposal is what crucial meetings of the EC finance and foreign ministers on April 21 and 22 will be trying to pin down in detail so that the proposed April 28-29 summit does not fall victim to the current wave of institutional malaise in the EC.