EU summit another missed opportunity

By DONNA BORAK, UPI Business Correspondent

BRUSSELS, March 23 (UPI) -- As European Union leaders concluded their economic summit on Wednesday bestowing congratulatory remarks on the success of the Lisbon relaunch and confirming further efforts to open up the EU's internal market, analysts suggested that the summit was not in the least a success, but a missed opportunity.

"Despite the creeping economic crisis facing Europe, the spring summit 2005 will be written off as yet another missed opportunity, as another set of bland promises and bad compromises, to be forgotten as soon as the government jets leave Zaventem airport," said Paul Skehan, deputy secretary general of Eurochambres.


With a latent European economy and rising unemployment, Skehan suggested that the necessity for economic revival was greater than ever, especially as the EU continues to lag behind the United States in terms of productivity, research and development investment and employment levels.


"It appears that things will have to get much worse for European businesses and citizens before the economic situation will be viewed as a serious concern, worthy of real debate and real action," said Skehan.

The European Commission set out an ambitious agenda for this year's summit aimed at finalizing negotiations over the growth and stability pact, the fiscal rules which underpin the euro, and relaunching the Lisbon Agenda, the EU's economic reform strategy, in order to stimulate growth and productivity after years of failed progress.

Despite strong opposition by countries like Austria and the Netherlands that a revised stability pact would only wreck further havoc on the European economy, EU leaders agreed to the revisions Tuesday night as set forth by European finance ministers on Sunday, calling the agreement a monumental success.

"When important things need to be done in Europe...there is a sign of solidarity of the European institutions," said Jean-Claude Juncker Prime Minister of Luxembourg.

The commission refuted these claimsclaims, saying that the pact would not be diluted or rendered meaningless. Commission president Jose Manuel Barroso argued that the stability pact was an integral part of the Lisbon Agenda and one in need of reform to get growth and productivity back on track.


"It was essential to get an agreement on the growth and stability pact. We needed a satisfactory reform to boost confidence throughout Europe," said Barroso.

Juncker attempted to diffuse some of the criticism over the pact's interpretation adding that reforms made would only "strengthen the preventive aspect of the stability pact" and would not allow member states to run up deficits.

"Any figure higher than 3 percent is still seen as excessive," Juncker added.

However, Ann Mettler, executive director of the Lisbon Council, a Brussels-based citizen forum, disagreed on the commission's decision to approve the stability pact's revisions, characterizing the summit as "one step forward, one step backward."

"Excessive budget deficits are not a way out of our economic malaise," said Mettler. "As recent history has shown, running big deficits -- as Germany has done -- does not create jobs. What we urgently need are structural reforms, especially of our sclerotic labor markets, to get Europe working again."

Although EU leaders feared that talks on the growth and stability pact would dominate discussions, leaving little room for talks on the Lisbon Agenda, much of the focus of summit talks appeared to be on the commission's plans to amend the services directive.


On Wednesday, Juncker vigorously denied rolling back on the services market due to the French referendum scheduled to be held May 29, reiterating the commission's plans to amend the directive, instead of suggestions of withdrawal.

EU leaders explained that the services directive, initially launched by the previous commission, would not be withdrawn as a result of the surrounding controversy over the French referendum, but rather amendments would be made to ensure that the directive met the requirements of the European social model and would avoid social dumping.

"The Bolkestein directive is not a line of demarcation between old and new member states," said Juncker. "Arguably social dumping is an obligation for a member states from the East, West and Central."

Under the services directive, companies would be allowed to provide services under the rules of their home country. The major dispute, however, rests on the "country of origin" principle which many feel lead companies based in Eastern Europe to take advantage of lower-cost labor and dump cheap services into higher-priced Western markets.

Juncker said that an agreement would not be set until the European internal market was "fully operational to ensure growth and productivity."

Socialist groups claimed victory over the commission's decision saying that the commission's decision was in line with their campaign against social dumping, consumer rights and environmental standards.


"The decision by the EU Summit is a victory for the socialist group," Martin Schulz, leader of the Parliament's socialist group. "During the parliamentary stage of the procedure, we will do everything in our power to improve this directive in terms of social responsibility."

However, Mettler of the Lisbon Council argued that she didn't understand why the socialist groups were claiming victory over the commission's decision to amend the current services directive, instead of being withdrawn.

Mettler also added that the current service directive will be viewed in a much different light when the United Kingdom becomes head of the commission in June.

"This will look very different when the British take over," said Mettler.

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