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Poor progress report for EU

European leaders
Protesters will be putting pressure on European leaders  

By CNN's European Political Editor Robin Oakley

BARCELONA, Spain (CNN) -- Will the European Union ever achieve its promise, made at a Lisbon summit two years ago, to turn the 15-nation bloc into the world's most dynamic knowledge-based economy by 2010?

At the Barcelona summit beginning Friday they will mark their collective report card on progress so far. And it makes pretty depressing reading.

Frits Bolkestein, the EU's competition commissioner, has warned that most of the reforms agreed so far by the 15 countries have remained on paper. He argues: "We can't go on saying the cheque is in the mail."

UK Prime Minister Tony Blair and his Swedish counterpart Goran Persson this week wrote in a joint article in The Times of London that it takes 12 times longer to set up a business in the EU than it does in the United States -- and costs four times as much.

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The United States gets 70 percent of electronic commerce, they said, compared to Europe's 20 percent.

The two prime ministers declared that if the EU could only match the United States on productivity and employment (there are 13 million jobless in the EU) then European citizens would be $7,000 a year better off.

But they warned that hard choices were needed to realise that potential, and the EU's record on hard choices is not an impressive one. And attempts at Barcelona to inject new momentum into the economic reform process seem bound for only limited success at best.

One of the problems for the EU in making hard choices is that there is nearly always somebody with an election coming up. This time it is the French. They are represented at Barcelona by conservative President Jacques Chirac and Socialist Prime Minister Lionel Jospin, who is challenging Chirac for his job in April. Between them they are likely to stymie any hopes of real progress.

A key objective in the economic reform process is liberalising gas and electricity markets. But the French, whose state-owned power giant Electricite de France is active in other countries' energy markets -- for instance, supplying power to 10 Downing Street, Blair's home, through its London Electricity -- have so far blocked a deal.

Neither Jospin nor Chirac will want to be seen conceding any national interest at this time, and the best that can be hoped for is that they will agree to allow outside competition for power supplies to businesses in France, but not for household supplies.

With Europe's populations weary of the constitutional navel-gazing and foreign policy grandstanding which seems to preoccupy their leaders so often, the Barcelona meeting is a chance to demonstrate their concern with bread-and-butter issues like jobs. And there is progress of a kind to report: There are five million more at work in the EU than there were at the time of the Lisbon summit.

The leaders are hoping for progress on issues like increased Internet access, "welfare to work" incentives for the long-term unemployed, cutting red tape, and progress towards a single EU financial market, which would mean cheaper borrowing for firms, better returns for savers and cheaper insurance policies.

But there is a basic clash between those like Blair, summit host Jose Maria Aznar of Spain and Silvio Berlusconi of Italy -- who want to free up labour markets -- and those like France and Belgium. who retain enthusiasm for the "European Social Model" with a heavy emphasis on workers' rights.

Around 100,000 Spanish trade unionists took to the streets in Barcelona Thursday to express their opposition to any tampering with present practices.

As ever, foreign affairs issues are likely to occupy much time at the summit, and Berlusconi -- who has just returned from Saudi Arabia -- will be calling for backing for the Saudi Middle East peace plan, seen by some EU officials as the only game in town at present.

There may be some quiet warnings to Blair on the fringes that if he persists in his apparent readiness to back the United States in military action against Iraq he will be at odds with many of his fellow leaders.

There will be some trepidation too over whether the summit will be disfigured, as were the EU summit in Gothenburg last year and the G8 summit in Genoa, by clashes between the police and anti-globalisation demonstrators.

Huge numbers of police have been drafted into the city with worries too about whether the Basque separatist movement ETA, which has killed some 800 people in recent years, will seek to use the presence of European leaders to unleash more violence to publicise their cause.




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