It's Britain vs. rest of Europe in subsidy row

British Prime Minister Margaret Thatcher is marching almost alone into a European Community crisis of the highest level. The EC summit today and tomorrow in Copenhagen shows every sign of becoming a major confrontation over British demands for cutting back on agricultural subsidies.

This is Britain's price for allowing the EC to raise new tax money for helping poorer regions and staving off near bankruptcy in the community budget.

West Germany has been blocking the key reform on which Britain insists - automatic price cuts and extra penalties for grain farmers who continue overproducing.

Mrs. Thatcher's position has remained clear: no strict controls on agriculture means no deal and no new budget money. It also means no way out from a growing financial mess next year as the EC tries to run its programs without a budget, on exactly the same amount of money it spent last year, and with an overall deficit of approximately $7 billion.

Most of the other 11 governments likely will pressure the British prime minister to compromise, and specifically to take seriously any concession West German Chancellor Helmut Kohl may offer her in Copenhagen. However, analysts predict Thatcher may reject any such blandishments.

For one thing, she doesn't mind standing alone. Many observers say Dr. Kohl will offer a compromise. But analysts say he will fail to get an agreement because of underestimating Thatcher's determination to get a real change in the way the EC works.

Why, however, has it come to be the German chancellor rather than the French President that stands at the other edge of the argument with Britain?

Since the 1981 election of President Fran,cois Mitterrand, it seems, the French have rejected the idea that high farm prices are in their national interest.

The French certainly still attach great importance to keeping the EC system of common agricultural prices throughout the 12 member-countries, with most the finance coming from the common community budget. However, the rise in these subsidies has led to protests from French taxpayers.

West Germany, on the other hand, always has favored high grain prices in the Community.

Most experts now agree these high grain prices are the principal villains in the familiar EC story of high farm subsidies, huge surpluses, soaring storage costs, and cut-price sales which alienate old friends such as the grain, meat, and butter producers of North America and New Zealand.

Kohl's ministers, however, have said the government could not agree to any measure that would cut its farmers' incomes.

The ministers have privately hinted that angry German farmers would bring down the government if their incomes were cut. The leaders of other governments, say German farmers, should understand such political facts of life and not push Germany too far.

Thatcher, however, may be ready to do just that, even at the risk of a summit failure.

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