Wednesday, November 14, 2007

EU gives Romania month to avoid farm payment cut

By Marcin Grajewski
BRUSSELS, Nov 14 (Reuters) - The European Commission gave Romania another month on Wednesday to fix its agricultural payments system or face cuts to farm subsidies from the European Union.

The EU executive last month gave the Black Sea newcomer to the bloc until Nov. 9 to make fully operational its farm payment scheme which is designed to prevent fraud. But a recent audit showed Bucharest had failed to overhaul shortcomings in its computer system, despite improvements.

"If the Romanian authorities ... can prove by Dec. 16 that major deficiencies identified have been remedied, the procedure leading to the adoption of safeguard mechanism will be stopped," the Commission said in a statement.

Under Romania's accession treaty, the EU may withhold a quarter of its direct subsidies to farmers and rural development payments, due to start flowing on Dec. 1.

"We're talking about a round figure of about 180 million euros that might be withheld from Romania (next year)," Commission agriculture spokesman Michael Mann told a news conference.

He said farmers would still be entitled to the money but the Romanian government would have to pay it out of its own funds.

Bulgaria, which joined the EU this year along with Romania, is not facing farm aid cuts because it had set up an operational payment system.

Some EU diplomats and lawmakers believe the Balkan duo should have been made to wait longer for entry, allowing time to fight corruption and ensure the bloc's funds would not be siphoned off by ineligible people or institutions.

To avoid sanctions, the Commission said Romania should upgrade its computerised animal and database and fix software designed to ensure that no payments are made to farmers before necessary checks.

Romanian Agriculture Minister Dacian Ciolos held talks in Brussels on Wednesday to reassure the Commission that his country would do its utmost to correct any shortcomings.

The Commission said Bucharest had pledged not to make any large payments to farmers before it upgrades the system.

Under the EU system, farm subsidies are first doled out from the national budget and later reimbursed by Brussels. (editing by Paul Taylor)

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