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EU: Ministers Struggle To Keep Economic Reform In Sight

  • Ahto Lobjakas

European Union finance ministers have met to prepare the agenda for the EU's summit in Stockholm later this month. The summit comes a year after EU leaders promised to make the bloc the most dynamic and competitive economy in the world by 2010. But RFE/RL's Brussels correspondent Ahto Lobjakas reports much of yesterday's meeting was spent on internal squabbling among member states and community institutions as well as on attempts to advertise the EU's current economic well-being.

Brussels, 13 March 2001 (RFE/RL) -- Preparatory documents indicated that yesterday's (12 March) meeting of EU finance ministers in Brussels would be largely devoted to setting up the agenda of this month's (23-24 March) Stockholm summit. But in the event, the ministers showed they also had some other priorities.

Briefing journalists throughout the day, ministers lost no opportunity to emphasize the EU's moderately good economic outlook compared with the recent downturns in the U.S. and Japanese economies.

At a concluding press conference last night, the EU's Commissioner for Economic and Monetary Affairs, Pedro Solbes, made the point in more cautious terms.

"We have not yet assessed duly the situation in Japan, mainly the new political elements of Japan, and as concerns the United States, we continue to work on the basis of the slowdown such as was presented by the American authorities in [Group of Seven] meetings. It means that the rate of growth [in the United States] this year will be below the rate of growth we had included in our economic forecasts for 2001, and it means that it will have an impact on the rate of growth of the EU and the euro-zone. But in spite of this effect we continue to consider that the rate of growth in the [EU and the euro-zone] in 2001 will continue to be close to 3 percent."

During most of the meeting, the ministers were preoccupied with what EU insiders call "comitology" -- negotiating the precise institutional balance in important areas of community legislation. This time, the focus was on new regulatory mechanisms proposed for the EU's savings, loans, securities, and insurance markets.

The European Parliament has indicated it would like extensive "co-decision" rights in this area, but that is opposed by most member states. The EU's executive Commission is concerned that new regulatory authorities for financial services might undermine its own role. Member states have yet to agree among themselves on how much authority the new bodies should have.

Against this backdrop, reports on meeting the ambitious goals set a year ago at the EU's Lisbon summit were adopted yesterday almost as an afterthought.

In Lisbon, EU leaders said they would work to turn the Union into the most dynamic and competitive knowledge-based economy in the world by 2010. One year later, the Stockholm summit will offer an important opportunity for taking stock as well as an occasion to fine tune the necessary reform program.

To this end, the EU's finance ministers yesterday approved a so-called "key issues" paper defining the agenda in Stockholm. The paper details the essential reforms needed to realize the what is termed the "European social model" -- an attempt to combine sustainable economic growth with far-reaching social goals.

Finance Minister Bosse Ringholm of Sweden, the EU's current president, summed up the Stockholm agenda in these terms:

"The key to higher growth and employment is the successful combination of sound macro-economic policies and continued economic reforms. Raising employment to reach full employment is crucial for social cohesion to increase, and the employment targets of Lisbon should be in focus in Stockholm." The paper calls for extensive structural reforms, setting forth a wide range of measures to liberalize various key markets. Special attention is given to labor market reform and measures needed to extend employment among groups such as women and senior citizens.

The paper says EU public finances must be put on a sustainable basis in order to cope with the impact of an aging population on existing state pension systems. It also calls for increased public investment in research and development and new technologies.

In a separate document, the EU yesterday approved a list of some 12 indicators to measure member states' progress toward the economic goals prescribed in Lisbon. Progress will no longer be assessed only on the growth rates of gross domestic production (GDP) among members. Now it will also depend on their employment rates by gender and age, regional variations in the unemployment rate, research and development, level of Internet access, and price levels in key markets like energy and telecommunications.

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