The EU Commission is hopeful of securing a further £80 million in funding for Northern Ireland and the border counties of the Republic, following the Northern Ireland Agreement.

The EU Commissioner for Regional Policy, Ms Monica Wulf-Mathies, stressed to Government and opposition leaders yesterday that the EU has been a far larger donor to Northern Ireland than the US.

In a set of wide ranging meetings with the Taoiseach Mr Ahern, the Minister for Finance Mr McCreevy, the Minister for Foreign Affairs Mr Andrews, and opposition leaders Mr John Bruton and Mr Ruairi Quinn, the Commissioner stressed the importance of building on the peace agreement. Since 1995 the EU has given Ecu100 million a year to support the peace process, with 80 per cent going to Northern Ireland and the balance to the border counties. The Commissioner said she is hopeful of securing a further £80 million funding for 1999, but after that other funds would have to take over, as the five year term for which these funds were initially agreed runs out.

Agreement from the European parliaments for the funds has been hard to secure, as the EU's contribution had received little attention. "Too much attention is paid to President Clinton and not enough to the EU," according to Ms Wulf-Mathies.

She added that the EU has been funding significant grassroots programmes over the past few years and its area partnerships were the first bodies where Sinn Fein and Ulster Unionist representatives worked together.

In addition, mainstream EU funding will have to be directed at underscoring the peace process. "Economic progress enhances the peace process but you also need the ceasefire to engineer economic progress," she noted.

"We still need to step up the intensity of cross border trade and relations. And we need to match delivery mechanisms on both sides of the border, which would mean more local authority and grass roots control over the money in the south."

The Commissioner again stressed there are specific conditions which the Government would need to meet if it wants certain parts of the state to qualify for the highest level of EU funding in the next round. She said regional funding at different levels, which would allow the border counties or parts of the west to continue as full objective one recipients, while the rest of the State got less, would be very difficult.

She noted that there are technical difficulties with statistics but "more importantly" there would need to be a regional government structure in place which was not just set up in order to attract more funds, but also had a wide degree of power.

This idea has been floated by the Government, she said, but nothing concrete has happened.

Mr McCreevy also said the option of sub-dividing the country into regions remains under consideration. "It is in the interests, not only of regions like Ireland but of the Union as a whole that the objectives of cohesion be attained on a sustainable basis."

Ms Wulf-Mathies also stressed that it is in Ireland's interest to agree the EU budget package as soon as possible rather than risking high rates which could push us through even the new targets for limited funding.

However, the Commission will win approval for its budget of 0.46 per cent of gross domestic product despite reservations in the UK, Germany, France, Holland and Austria, she predicted.