EU launches ambitious move toward revival

08:13, March 29, 2010      

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The European Union (EU) is finally on its way to ambitious revival following years of sluggish growth and the worst economic crisis in decades.

A two-day summit of the EU concluded here on Friday with initial approval of a 10-year economic strategy, apart from a bailout package for Greece.

In response to the immediate threat of the Greek debt crisis, countries of the euro zone managed to agree on a mechanism on how to bail out Greece if necessary. This would not only help restore stability, but also kick-start the building of economic governance in the single-currency club.

The Greek problem has exposed serious drawbacks of the euro zone framework, notably a lack of surveillance and coordination of national economic policies.

Euro zone leaders agreed on the need to strengthen surveillance of economic and budgetary risks and possible methods for their prevention. They also called for a robust framework to enhance their capacity to act in times of crises. Both approaches would consolidate integration in the euro zone and help the region emerge stronger from the crisis.

Looking into the future, leaders of the whole EU embraced a 10-year economic renewal, which aims to boost Europe's competitiveness in the next decade when long-term challenges of globalization, pressure on resources and ageing intensify.

The EU is confronted with those challenges as the financial and economic crisis has wiped out years of economic and social progress and exposed structural weaknesses in Europe's economy.

For years, the EU lagged behind its main rivals in terms of economic growth. Structural problems such as low productivity due to insufficient R&D spending and rigid labor markets were cited as the main reasons.

The Europe 2020 Strategy, to be finalized by EU leaders at their June summit, sets out a vision of Europe's social market economy for the 21st century, under which the EU will be turned into a smart, sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion.

It also dealt with a key issue behind the failure of the previous Lisbon Strategy: lack of control over implementation by member states.

Economic governance is once again essential. The leaders have moved to call for efficient monitoring mechanisms to ensure the successful implementation of the new strategy. They promised to make an overall assessment of progress achieved both at the EU and at the national level in implementing the strategy once a year.

While building a more integrated and stronger economy, the EU is trying to translate its collective economic power into a single star role on the world stage.

Speaking with one voice is the key.

On the sidelines of the summit, EU foreign policy chief Catherine Ashton presented a proposal establishing the bloc's new diplomatic service under the Lisbon Treaty, which came into force in December.

Henry Kissinger's problem of finding the right person to call when he wanted to speak to Europe may be partly solved -- though there are too many "presidents" leading the EU, and large member states retain separate seats in international fora such as the UN Security Council and the G20.

By envisioning a stronger international role, a more confident EU is becoming more active in global issues.

At the summit, EU leaders prepared their positions both for the global climate change negotiations and the G20 summit in Canada in June, hoping to demonstrate leadership in the fight against global warming and in the push for international financial reform.

Although it remains to be seen how far the EU can go in further integration both economically and externally, the summit, as the first formal one held after the Lisbon Treaty took effect, marked a step forward.

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