The populations of many species of farmland bird declined greatly across Europe during the last quarter of the twentieth century, indicating severe damage to the continent’s biodiversity. Recent analyses show that these declines are correlated with agricultural intensity across Europe, and that declines in the European Union (EU) have been greater than in non-Member States. In this review paper, the reasons for the uneven distribution of agricultural intensity and bird population trends across Europe are discussed and the political and economic mechanisms behind agricultural intensification reviewed. In the EU, the driving force behind agricultural intensification has been the Common Agricultural Policy (CAP), which simultaneously supports greater productivity and inhibits extensification. In eastern Europe, there has been a general reduction in state support for agriculture since the collapse of communism and farmland bird populations have declined far less than in western Europe as a result. However, many countries are hoping to join the EU in the near future, one of several reasons which make reform of the CAP inevitable. The introduction of the CAP in its present form to these countries is likely to damage the important farmland bird populations currently found there. The potential exists to restructure EU support for agriculture to decouple payments from productivity and reward farmers for making environmental improvements to their land. This would facilitate EU enlargement, reduce the costs of producing and storing agricultural surpluses, reduce the external costs of agriculture, allow the EU to comply with international trade agreements and protect and enhance farmland bird populations. A number of possible delivery mechanisms are discussed.