Relief over Irish 'yes' vote, but major obstacles remain

Ireland's emphatic endorsement of the Nice Treaty brought a collective sigh of relief from Europe's leaders yesterday, but officials warned that major obstacles must be overcome before 10 nations can join the European Union.

Rows over who will foot the bill for the EU's expansion, worries over the readiness of the countries about to join and a political crisis in the Netherlands still pose threats to Europe's eastward enlargement.

In Brussels, there was delight at the result, which ends a run of recent referendum victories for Eurosceptics in Ireland and Denmark. Pat Cox, the Irish president of the European Parliament, argued: "The only people in the EU to have been consulted have, after a period of reflection, given the clearest possible signal that Europe's rendezvous with history cannot be further delayed," he said.

The Nice Treaty's ratification was vital because it lays down many elements vital for the accession of the 10 nations: Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Latvia, Lithuania, Estonia, Cyprus and Malta.

But while the European Commission president, Romano Prodi, welcomed the vote, his spokesman, Jonathan Faull, added: "We are not saying that enlargement is now a done deal. There is a lot of work to be done to secure the necessary agreements." That work starts in earnest on Thursday when the heads of all 15 EU governments try to thrash out one of the most thorny of the remaining issues surrounding enlargement: who pays for it?

The French President, Jacques Chirac, and the German Chancellor, Gerhard Schröder, will meet before the summit to try to end the deadlock between Paris and Berlin which threatens this week's talks with stalemate.

The two countries are at loggerheads over a plan to offer 25 per cent of the direct subsidies received by EU farmers to their counterparts in the new countries, phasing in the full 100 per cent over a decade.

Germany, the UK, Sweden and the Netherlands are blocking the proposal, pitting Berlin, which pays most into EU coffers, against Paris which is a big beneficiary of the EU's agricultural policy.

In exchange for agreeing the farm package Germany wants a pledge that agriculture spending will start to decline when the EU's next budget is negotiated in 2006. So far, that has not been forthcoming from Mr Chirac, who is a friend of France's powerful farm lobby.

Even when this row is resolved – and the prospects of agreement this week are not high – the outcome will have to be negotiated with the candidate countries at a summit in Copenhagen in December.

Meanwhile, the fall of the Dutch government opens the way for a new coalition featuring Gerrit Zalm, leader of the VVD liberals, who said last week that Poland was among those ill-prepared to join the EU. The Netherlands blocked agreement in accession negotiations on competition law with the Czech Republic last Friday. And the caretaker Dutch cabinet is talking about imposing a new system to monitor countries joining the EU.

Diplomatic problems lie ahead, too, over the status of Cyprus, and on whether the EU begins talks with Turkey on its membership bid.

And a convention on the future of Europe, chaired by the former French president, Valery Giscard d'Estaing, is embarking on the next, problematic chapter of the EU's evolution. His team of 105 politicians is trying to draft a new constitution defining Europe's objectives and modernising its structures.

Nevertheless, the vote in Ireland was crucial because a "no" might have given countries which are sceptical about enlargement a plausible pretext to delay it. The rejection of the treaty would have cast doubt over the democratic legitimacy of expansion. But it would also have created a myriad of technical problems which could have been used as a reason to delay the process without opposing it publicly.