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Keep 'Em Down On Reform
How radical can a reform of the E.U.'s €45 billion Common Agricultural Policy (CAP) truly be if the French support it? In short, not very. Brussels officials are cheering last week's farm deal, in which the E.U. for the first time agreed to decouple farm subsidies from production. That should remove farmers' incentive to overproduce crops they know they can sell at a fixed price, and perhaps remove a big obstacle to a new world-trade accord. Yet farmers will still get handouts if they meet environmental or food safety standards.

The French, who long opposed such a deal, finally agreed, so long as the E.U. allows some subsidies to continue, including for livestock and milk.

INDICATORS Unwanted Interest German bank WestLB's CEO Jürgen Sengera quit after regulators criticized the bank's risk management in financing a U.K. TV rental chain. His resignation came as state prosecutors began a criminal inquiry into the bank's conduct. Fixed-Line Hangups Spanish phone giant Telefónica announced plans to cut up to 15,000 jobs from its fixed-line business by 2007. Team Spirit In return for E.U. recognition of Canada's rights to "rye whiskey," the Canadians agreed to allow the use of regional European wine names like Champagne only for wines actually made in those regions. Last call for Canadian Chianti.

And the total cost of CAP — some 45% of the E.U. budget — won't be reduced by a single euro for the next decade. Le Monde hailed Europe's agricultural revolution on its front page, and French farmers accused the government of selling them out. Meanwhile, Peredur Hughes, president of the Welsh National Farmer's Union, called the accord "a complete dog's dinner."

Either way, the deal may not go far enough to rescue trade talks. Agricultural commissioner Franz Fischler says the E.U. "has done its homework" and it's up to the U.S. and others to follow suit. But American and Australian officials say the E.U. still needs to open markets and phase out export subsidies. What would the French think of that?

But Who'll Bail Out Protektor?
Who will insure the insurers is no longer a theoretical question since the collapse last week of the life insurance arm of Germany's Mannheimer Holding, the first such company to fold since World War II. The German Insurance Industry Association failed to raise ?370 million in rescue capital from other insurance companies. Mannheimer will now become part of a company called Protektor, which was set up last year by the industry to prop up any member which started to fall. Protektor will take over Mannheimer's policies, and can distribute them to other insurers.

Insurance regulators say Protektor should have sufficient funds to cover Mannheimer's policies, but the system is untested. Some find it odd that a firm's competitors are keeping it alive, but the industry insists its integrity is at risk. Still, the rot may continue. Helmut Hipper, fund manager at Union Fonds Holding, predicts: "Many companies will have trouble surviving and there will be consolidation in the industry." — By William Boston/Berlin

The Bottom Line
	We are literally staring into the abyss
		— DEREK SIMPSON, joint general secretary of Amicus, the U.K.'s largest private-sector union, claiming the British manufacturing sector could face extinction within 25 years unless protected by the government