Although the Council of Ministers and the European Parliament agreed on Friday 21 November to provide a €1 billion fund to help farmers in developing countries, they have rejected the Commission's plan to finance it using unspent Common Agricultural Policy (CAP) funds. Changes to the funding sources of the proposed € 1 billion have led to accusations of "creative accounting".

European Commission President José Manuel Barroso said the agreement showed that the EU was "really committed to action in support of its development ideals". However, the final agreement bears little resemblance to the bold proposal outlined in May.

Under the terms of the agreed deal, the fund will instead be made up from the EU's emergency aid reserve, from existing development funds and from money built into the EU budget to finance unforeseen needs. Member states will contribute only a further €240 million from their national budgets, and it seems likely that some of this will be diverted from national development aid budgets.

The fund will therefore use up almost a third of the EU's emergency aid reserve for 2009 and 10% of the entire 2007-13 budget for the Instrument for Stability - which is intended to help afflicted countries cope with the effects of war or natural disasters.

Sources:

• European Voice
• http://www.irishtimes.com/newspaper/world/2008/1125/1227486545070.html