ABSTRACT
This chapter examines several likely outcomes of the accession negotiations with respect to direct payments. It explores three different options: full application of the Common Agricultural Policy (CAP), exclusion of direct payments, and a compromise involving a partial renationalisation of the CAP and reorientation towards the environment and rural development. The chapter discusses economic and geopolitical implications of enlargement and also analyses the future development of the CAP in a general negotiation framework rather than concentrating on the CAP alone. Agenda 2000 addresses the issue of eastward enlargement in addition to reform of the CAP and Structural Funds. Germany, the United Kingdom, and France have comparative advantage over the Central and Eastern European countries in science-based products. From the German and Austrian perspective, eastward enlargement is an essential element of peaceful stability. Consumers are assumed to be rationally ignorant about specific policies, such as agricultural policy, which is only one of several items in the package they are voting for.
