ECONOMY

EU must modernize to reverse economic decline, says Barroso

BRUSSELS – Europe must launch a daring modernization drive to reverse its relative economic decline and safeguard the continent’s culture of social welfare, the EU’s executive said in a strategy paper unveiled yesterday. «We must release Europe’s enormous untapped potential,» European Commission President Jose Manuel Barroso said in a statement released as he spelt out his 2005-2009 game plan to the European Parliament. «I believe that we must embark on a process of transformation as bold and as courageous as the single market in 1985, the launch of the single currency or the unprecedented enlargement of the European Union to 25 member states.» The 12-page document was a response to the EU’s spectacular failure to meet the goals it set itself in 2000 under the «Lisbon Strategy,» a drive to make Europe the most competitive and dynamic economy by the end of this decade. Officials say the «2010» target will be quietly dropped when the Commission meets next week presents new proposals to meet the Lisbon goals. Barroso’s paper proposes no grand new projects for the EU, instead aiming to «take the Europe we have and make it work.» It also calls for Europe to become a more effective «world partner» but focuses less on foreign policy than the economic agenda. EU business lobby UNICE welcomed the strategy. «We must have competitiveness in Europe in order to generate the wealth needed to sustain the social model,» UNICE Secretary-General Philippe de Buck said in a statement. Since 1996, the EU’s average annual growth, in terms of output per head, has been 0.4 percentage points below that of the United States. The productivity growth rate in the EU’s pre-enlargement bloc of 15 nations averaged 1.4 percent over the same period compared to a US rate of 2.2 percent. Knives out But knives were already out in the EU legislature for the former Portuguese Prime Minister Barroso, a market-oriented reformer who prescribed a bitter austerity pill for his own country in 2002. Socialists and greens warned that Barroso’s five-year dash to tackle the 25-nation bloc’s pallid economic growth and its persistently high unemployment rates could undermine Europe’s «social model» and respect for the environment. Socialist group leader Martin Schulz gave Barroso’s plan conditional approval. «Growth must ensure social welfare,» Schulz told the plenary session of the EU assembly. «If that’s your (aim), then you have got the Socialists behind you.» However, Schultz warned that the Socialists would oppose any reform that leads to a decline in EU social standards. Barroso, who was forced by opponents in the Parliament to throw an Italian conservative off his executive team before it took office in November, conceded that he was taking a gamble. «We are taking a risk by saying that the absolute priority is growth and employment,» he told reporters on Tuesday night. «I do not pretend to please everyone: It is a political program that makes choices, but balanced choices,» he said, adding that the emergence of Asian economies – and China’s in particular – made Europe’s modernization all the more urgent. Barroso called for a «partnership for renewal» between EU institutions and member states, many of which resisted and resented past attempts by the European Commission to steer them along the path of the thus-far fruitless Lisbon agenda.