European Union Prepares for Economic Crisis Meeting
STRASBOURG — As the European Parliamentgathers to install a new team of commissioners Tuesday to work with José Manuel Barroso, president of the European Commission, in his second term, Europe’s economic modernization agenda risks being overwhelmed by one issue it would rather not have to tackle: The debt crises that has swept across the Continent.
With the markets taking fright at budget deficits in Greece, Portugal and Spain, and sapping confidence in Europe’s single currency, the need for strong leadership within the 27-member European Union has rarely been greater. But the crisis has raised questions about the European Union’s ability to deal with the structural problems that have led to a rift between richer and poor nations within the eurozone.
The first test comes Thursday in Brussels when, rather than addressing growing concerns about the euro, E.U. leaders will start work on a broader economic strategy designed to bolster competitiveness in the next decade.
Talks are underway on what kind of statement can be issued to calm market fears over eurozone debt. But diplomats said Monday that unless there were dramatic market developments, the main focus of the meeting to be held in the elegant Bibliothèque Solvay will be the longer-term economic plan, rather than fire-fighting the euro debt crisis.
“They are basically fiddling while Rome is burning,” said Daniel Gros, director of the Center for European Policy Studies, in Brussels. “What’s the use of even the best plan for 2020 when you don’t get there because in the meantime Greece or Portugal explodes?”
Mr. Gros argued that the E.U. leaders should be talking about creating a European monetary fund, operating on similar lines to theInternational Monetary Fund, to deal with potential eurozone defaults. “These summits are worse than useless,” he said, “because they create the impression that something is being done when what could be done is not, and when what should be discussed is not.”
Moreover, the meeting Thursday will have to be carefully choreographed to avoid exacerbating tensions among the bloc’s leaders, as Mr. Barroso finds himself jostling for power with the European Union’s new figurehead, Herman Van Rompuy, the first full-time president of the European Council.
It was Mr. Van Rompuy, a former Belgian prime minister, who called Thursday’s meeting, thereby seeking to define economic modernization as his priority.
“From Barroso’s side it is a bit of a problem that Van Rompuy is taking all the attention,” said an E.U. diplomat who was not authorized to speak publicly.
Thomas Klau, senior political analyst at the European Council on Foreign Relations, added that, since enforcement of the Union’s newLisbon Treaty, “we are in a situation where there are not fewer, but more, players.”
Although Mr. Barroso and Mr. Van Rompuy have been discussing strategy over breakfast once a week, both have drawn up documents for the Thursday meeting and had to negotiate to avoid duplication.
Mr. Barroso will concentrate on specific policies — with about five priorities for reform — and Mr. Van Rompuy will focus on how to achieve them. His ideas include asking national governments to submit annual reform programs with targets — such as research and development investment — and for those to be assessed each year.
This is a familiar territory for Mr. Barroso since he left as prime minister of Portugal five years ago to become president of the commission and identified “growth and jobs” as his central objectives.
Five years and a recession later, the debt crisis is a reminder of both the eurozone’s short-term frailties and its structural weaknesses.
In Brussels last week, Mr. Barroso argued that, before the crisis struck, the European Union had made gains in employment — from 2005 to 2008, he said, 9.5 million jobs were created while the unemployment rate dropped to 7 percent.
“If we want to keep the gains we have achieved before the crisis and keep the high standard of living, you need to go on in terms of reforms and competitiveness,” he said, adding that one of the lessons of the current crisis was not to underestimate “the interdependence of our economies, particularly in the eurozone — reforms or lack of them affect the performance of others.”
In theory, once the European Parliament has approved his new team on Tuesday, Mr. Barroso should be freer than before to use the economic tools held by the commission, which acts as anti-trust regulator, trade negotiator and guarantor of the Union’s single market, as well as distributing tens of billions of euros in subsidies each year.
In practice, it remains possible that Mr. Barroso will find himself more hemmed in than ever both by Mr. Van Rompuy’s arrival and by the big member states.
“The crisis has thrown economic and financial issues back to the top of the policy agenda,” said Mr. Klau of the European Council on Foreign Relations. “These are areas where the commission has an important voice and it will be up to Barroso whether he tries to become a driving force in the economic and financial agenda or whether he continues to be more reactive.”
One key question is whether national governments will take charge of the process of economic reform, effectively sidelining Mr. Barroso. Another is how much support he can expect from big member states for his initiatives.
Internally, the European Commission became highly centralized in Mr. Barroso’s first term, operating like a cabinet under a powerful leader.
“It is a highly presidential system under him,” said Joachim Fritz-Vannahme, Europe director of the Bertelsmann Foundation, a German research organization that focuses on democratic reform. “He is always the guy who will decide.”
But outside the commission’s headquarters, the climate has become more complex as the Union has grown and skepticism over European integration has increased.
In the enlarged European Union, French and German support is essential — but not sufficient — for any political project Mr. Barroso frames. Not only have both countries’ enthusiasm for the Union dimmed, but their relations with each other have become less harmonious.
Mr. Vannahme argued that Mr. Barroso’s main task will be to manage the 27 nations rather than to define new political strategies, and that his powers will be circumscribed.
“The E.U. has so many challenges that you don’t have to create a new vision or create a new raison d’être,” Mr. Vanhamme said. “The raison d’être is to get the right answers from the 27 member states to these challenges.”
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