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EU: Failing 'Lisbon Strategy' Of Economic Renewal Revamped

The European Commission tacitly admitted yesterday that plans agreed on at the European Union's Lisbon summit five years ago to overtake the United States by 2010 as the world’s best-performing economy have been unsuccessful. Instead, the gap in the economies of the EU and the United States continues to grow, it admitted. The president of the European Commission, Jose Manuel Barroso, has unveiled a more modest blueprint that seeks to boost economic growth and job creation through an emphasis on innovation and a better business climate.

Brussels, 3 February 2005 (RFE/RL) -- The European Union’s grand project to overtake the United States as the world’s largest economy seems to have been scrapped after failing to accomplish its goals.

Yesterday, European Commission President Jose Manuel Barroso relaunched the EU’s so-called Lisbon agenda, adopted at an EU summit in the Portuguese capital in 2000 with the aim of making the EU the “world’s most dynamic knowledge-based economy” by 2010.

The implicit reference to the United States has now disappeared. Unveiling his new strategy at the European Parliament, Barroso conceded that instead of catching up with the United States, the EU continues to lose ground. He noted that whereas the EU’s economic growth rate has averaged 2 percent annually over the past years, the United States has grown by an average of 3.5 percent a year in the same period. Put in per capita terms, EU citizens enjoy prosperity levels that are less than two-thirds of those of their U.S. counterparts.

Barroso’s new approach proceeds from the "simple" idea that boosting growth is the key to creating jobs and maintaining the EU’s generous social welfare standards.

“The simple truth from the last five years," he said, "is that we have to get our economy moving, if more people are to find a job they want and if we hope to preserve and develop our unique model of society that is our continent’s calling card.”
“We must deliver jobs and growth by making Europe an attractive place to invest and work, placing knowledge and innovation at the heart of European growth." -- Jose Manuel Barroso

The EU’s commissioner for enterprise and industry, Guenter Verheugen, yesterday offered a gloomy assessment of the Lisbon strategy over the past few years. In a statement, he said the EU has seen “unsatisfactory growth and investment,” while global competition has grown enormously and little is being done to dampen the effects of the “dramatic aging of the population in Europe.”

Verheugen's diagnosis is that the Lisbon project had serious “built-in flaws” -- “no focus, poor political responsibility and implementation.”

Barroso’s new blueprint removes much of the bewildering array of objectives laid down in Lisbon in 2000. He said the key factor in accelerating economic growth and creating more jobs is making the EU more business-friendly.

“We must deliver jobs and growth by making Europe an attractive place to invest and work, placing knowledge and innovation at the heart of European growth," he said, "and shaping the policies that allow our businesses to create more and better jobs.”

At the European Parliament yesterday, Barroso predictably drew support from the body’s largest faction, the right-wing European People’s Party. The social democrats appeared skeptical, although they also recognize the need for effective reforms to keep the EU’s “social model” going.

Barroso indicated he has little time for schemes mooted in the past by France and Germany for the promotion called “European champions,” in which state-supported large enterprises were handpicked to act as rivals to U.S.-based industrial giants.

Rather, Barroso was keen to emphasise that economic reforms must above all favor smaller and medium-sized enterprises, which are directly dependent on private initiative.

“If Europe is to prosper," he said, "it needs to become a more attractive location for businesses of all sizes across the union. Our approach recognizes the value of our industrial base, as well as the particular importance of Europe’s small and medium-sized businesses. They represent 99 percent of our businesses and two-thirds of employment. There are too many obstacles to becoming an entrepreneur or starting a business.”

Barroso also emphasized the importance of expenditure on research and development. Few EU member states spend at levels comparable to the United States, approaching 3 percent of gross national product.

Barroso called for a European Institute of Technology to be established. He said Europe must attract "brains," as well as investment and business.

Barroso indicated he will reverse the trend set by his predecessor, Romano Prodi, who tried to wrest much of the control over the Lisbon plan away from the member states and to the EU executive. Now, it is the member states that must take the responsibility, Barroso said. Among other things, he said each member state must appoint a government-level overseer for the remainder of the Lisbon process.

Verheugen, too, stressed the need for the member states to reform their labor markets, welfare and education systems as key elements in increasing EU competitiveness.