ECONOMY

EU is keen on reforms despite the obstacles

Brussels – When, back in 2000, the so-called «Lisbon strategy» was launched, it was heralded as the recipe for making Europe the world’s pre-eminent economic power by 2010. This was a brave declaration in a more optimistic era. The affirmation of that goal in the European Spring Summit that ended here on Friday, sounded less a conviction than a wish to preserve the «European model» in an extremely difficult period. Despite the fact that the economic agenda, the very reason for calling this summit, was overshadowed by the Iraq situation, the decisions made to boost the Lisbon program were quite important. Regarding the war itself, the finance ministers, meeting on Thursday, decided, and the EU leaders confirmed on Friday, that «close coordination» was required to handle a possible rise in oil prices. Unilateral moves, such as reductions in fuel taxes, were frowned upon, because, as Economy and Finance Minister Nikos Christodoulakis said, such a decision would send «the wrong signal» to oil-producing countries. The 15 EU members agreed that, despite the steps taken since March 2000 to strengthen European economies, most of the work to implement the Lisbon goals still has to be done. For this reason, they appointed a working group, presided over by former Dutch Prime Minister Wim Kok, to make specific proposals to boost employment. On this politically explosive subject, the 15 hope to concoct an economically sound program that will boost demand for jobs. This they expect to achieve by providing a series of counterincentives to early retirement and to the European preference for living on welfare rather than taking low-paying jobs. There are proposals to lower taxes on salaried employment in order to boost both demand and supply. The end goal, however, is not to forego revenues but to boost the number of employed in order to keep pension funds, now threatened by the continuing aging of the population, solvent. On the demand side, the summit made, as expected, renewed calls for strengthening research, innovation and entrepreneurship. The aim is to create a large number of small and medium-sized enterprises which in turn will create plenty of «quality» jobs. The EU leaders also want to further integrate their states’ economies and to reduce the regulatory burden by opening up markets such as railways and energy. A good example of the distance that separates the (theoretical) wishes from their practical implementation was the inability of the summit to pass tax reform measures, including lower taxes on savings, because of Italy’s resistance. The Italians demanded compensation for lost income by increasing the amount of milk they produce, drawing the ire of the summit president, Prime Minister Costas Simitis.