Plans for a new-style European Community (EC) free of damaging budget wrangles receive their first full review from EC foreign ministers today but are unlikely to gather much support. Diplomats said key EC capitals would voice strong criticism of proposals that would lead to a sharp increase in EC budget payments by bringing member states contributions more into line with national wealth. They said the ECs current paymasters Britain France and West Germany would lead the opposition to the plans designed to enable the community meet the challenges of the 1990s. Faced with a budget deficit this year of at least five billion dlrs EC Commission President Jacques Delors called in February for a radical overhaul of the EC financing system. Such action was necessary he argued to end a damaging cycle of annual budget crises and ensure cash for technological research programs and regional and social spending projects. Ironically diplomats said the move could spark exactly the type of row it was intended to avoid with industrially developed northern states demanding assurances the new cash would not be swallowed up by the poorer southern members. Delors plans by linking a countrys contributions to its Gross National Product (GNP) would over the next five years add some 18 billion dlrs to the present budget of 34 billion. Currently contributions are calculated on a percentage of Value Added Tax (VAT) returns. Under the new scheme all countries would pay one pct of their VAT receipts to Brussels. Extra cash would then be raised in line with needs by a levy on the difference between a countrys total VAT receipts and its GNP. London is one of the most resolutely opposed countries to the scheme arguing instead that money should be made available from deep cutbacks in the ECs heavily-subsidised farm sector. Unofficially many EC capitals secretly support the wearisome budget wrangling taking the line that the highly diverse 12-nation Community can only take tough decisions when forced to do so. The issue is further complicated by a possible general election in Britain and acceptance that the EC problems cannot seriously be addressed by London until those polls are out of the way.
EC MINISTERS LIKELY TO CRITICISE FINANCE IDEAS