Beef Crisis Creates A 'Political Football' Within Europe

'Mad cow' crisis affects many as profits fall

Europe's "mad cow" crisis is rattling everything from the price of pepper in Indonesia to basic assumptions about how Europe's economic partnership works.

Since the March release of a British report suggesting that mad-cow disease (bovine spongiform encephalopathy, or BSE) could be passed on to humans, consumption of beef in Europe has dropped by a third. Europe's stockpile of beef, which had been zero on the eve of the crisis, is now 700,000 tons, and climbing.

The latest bombshell - that the disease could be passed on to calves - came just as officials of the 15-member European Union (EU) were preparing to close shop for August vacation. The new British evidence will be taken up the first week of September.

Also, in a controversial ruling this week, a British coroner said that a young vegetarian died of eating contaminated hamburgers as a child - a finding critics charge is based on no scientific evidence.

Cattle traders at Fougres market in the west of France aren't waiting for experts to assess the new evidence. They have their own ideas of the culprits: Britain, for not taking adequate measures to protect the health of its herds; EU bureaucrats, for failing to avert a crisis; and the US cattle industry, for taking advantage of it.

"Britain served up Europe on a platter to the Americans. Soon all of us small producers will be out of business, and the Americans can sell their hormoned beef on our markets. Europe has known about mad-cow disease for 10 years, but did nothing about it," says Joel Jouan, a rancher from nearby Iss.

Many ranchers worry that because of the "mad cow crisis" they will forever lose the Russian and Middle East markets to US cattlemen. "There are going to be lots of bankruptcies," says Gerard Barbin of France's National Cattle Federation. "We're in a serious crisis that will need to be resolved on a scientific basis that is still not well-known. The principle we've adopted is the principle of precaution."

In France, precautions include the slaughter of entire herds if a single case of BSE is detected. There are new computerized procedures to track animals from birth, and restrictions on the disposal of beef carcasses. France also launched a national advertising campaign favoring French beef in a bid to boost consumer confidence. France has had only a handful of reported BSE cases.

Ads to 'Buy French'

French farmers and ranchers welcomed the French ads. "We're seeing much less beef from Holland, Belgium, Germany, and eastern European nations because the French government wants to boost consumer confidence by 'Buying French,' " says Michel Peudenier, a cattle merchant from western France.

But critics charge that such measures violate the EU principle of open markets and collective decisionmaking. Since Europe adopted a Common Agricultural Policy in 1962, agricultural production quotas and subsidies have been set at a European level, rather than by individual member-states. The CAP now amounts to $52.8 billion, about one half of the EU's annual budget.

France also pushed for and won agreement for member states to be able to compensate their own farmers for heavy losses resulting from the mad-cow crisis, over the objections of the Germans and other advocates of stronger European institutions.

But even in Germany, regional politicians are challenging the authority of Brussels to resolve this crisis. This month, Germany's largest state government, North-Rhine Westphalia, called for a regional ban of all British milk products to restore consumer confidence. The region's 70,000 livestock farmers have been hard hit by a 30 percent drop in beef consumption.

The mad-cow crisis is also taking a toll on European budgets at a time when member-states are struggling to cut spending to meet requirements for a common European currency by the end of 1998. British officials estimate that BSE will cost Britain $3.4 billion. While the EU has promised to pick up 70 percent of the costs of the slaughter, British officials say that when all the costs are tallied, British taxpayers will pay 70 percent of the total costs.

In April, the European Commission resumed buying beef to support prices for the first time since 1993. The tab could run to $3 billion. European officials have yet to say how they will find money in their budgets to pay for the big beef bailout, and will not even speculate on what the final costs could be.

French ranchers began bearing the brunt of the crisis almost immediately. Cattle prices at Fougres market dropped so precipitously that for six weeks no prices were recorded.

"For the first two-to-three months, ranchers just kept cattle off the market, but with this summer's drought, the grass dried up early, and they couldn't afford to wait," says Andr Despinasse, director of the Fougres market. "The big crunch will come with the traditional September sell-off of herds."

Delays in culling herds

After Europe slapped a ban on British beef exports, Britain retaliated by vetoing more than 90 pieces of EU business. At a Florence summit June 21-22, Britain's European partners agreed to a framework for a phased lifting of the ban.

That agreement is now threatened by delays in implementing Britain's plan to eliminate diseased animals from its herd. After the Aug. 2 release of a British report suggesting that a diseased cow can pass BSE to her offspring, Germany called for a return to a total ban on British beef.

"What is frightening about Europe's management of the mad-cow crisis is to see how a fundamental public-health issue has become a political football," says Stanley Crossick, executive director of the Brussels-based Belmont European Policy Center.

"It may take years to even agree on a definition of the problem," he adds. "What the mad-cow crisis has shown is that issues of public health cross borders and that individual countries are incapable of solving them on their own."

This week, British Prime Minister John Major is expected to approve new plans for a selective cull that takes into account the possibility of maternal transmission. But the plan will not be implemented until mid-October, a delay sure to raise new objections when European partners reexamine the question next month.

However, Britons can already claim an ironic victory over European partners. The British have long urged reform of the common agricultural policy, and while British officials insist there is no connection, one of the impacts of the mad-cow crisis has been to bring European beef prices in line with world markets.

"For years, the British have been saying that the European price of beef had to approach the world price, and now it has happened in six months," says French cattleman Peudenier.

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