EU leaders try to lift markets

By Robin Oakley, CNN's European Political Editor

STOCKHOLM, Sweden (CNN) -- European Union leaders will end their two-day summit in Stockholm on Saturday by trying to cheer depressed economic markets.

They will renew their commitment to make Europe the most dynamic knowledge-based new economy in the world within 10 years.

Headlines were hijacked on their first day by sombre news on the foot-and-mouth epidemic and by the growing fears of escalating conflict in Macedonia.

The leaders, who have been making strong efforts to ease the situation in Macedonia , were somewhat wrong-footed too by Russia’s President Vladimir Putin.

When they urged him to find a political solution in Chechnya, he vigorously defended his blitzing of Grozny by saying that terrorist bases had to be wiped out.

Controversially Putin contrasted his actions with what he saw as the failure to clamp down hard enough on ethnic Albanian rebels in Macedonia.

But EU leaders were pleased overall by Putin’s visit, the first attendance at an EU summit by a Russian leader.

They had discussed co-operation on energy and promised him help from the European Investment Bank on improving Russia’s environment.

Goran Persson, the Swedish Prime Minister and summit host, said: "The EU wants to engage Russia, not to exclude Russia, from the process of European integration."

The leaders believe they have helped to ease Russian fears over EU enlargement although negotiations over Kaliningrad, which will become an enclave within the EU as it expands to include countries like Poland and Lithuania, are expected to be difficult.

The leaders will on Saturday rededicate themselves to the drive to modernise Europe’s economy although they recognise that some problems will take time to resolve. Cross-border freeing-up of the gas and electricity markets, for example, is still sharply opposed by France.

Tony Blair, the UK Prime Minister, said that a liberal market in energy had to be part of the future.

Downward spiral

But Laurent Fabius, the French economic minister, scoffed at what he called "deregulation for deregulation’s sake" and Blair conceded: "I don’t know that anyone’s powers of persuasion are quite sufficient to make France depart from its stated position."

With the world’s stock markets talking themselves into a downward spiral, the EU’s leading figures spent some time on Friday suggesting that the pessimism was being overdone in their area and that Europe was better placed than the U.S. or Japan to get over any economic downturn.

Pedro Solbes, the monetary affairs commissioner, told a news conference: "Growth this year will be substantially higher in Europe than in the other major developed economic regions. This has not yet been recognised by the markets."

EU leaders remain puzzled at the euro’s continued failure to advance against the dollar despite the growing gloom about the US economy.

They are proudly boasting of having created 2.5 million jobs in the year since the Lisbon summit and they hope that rededication to their aims for 2010 will hope to give markets a lift.

Summit faces derailment
March 21, 2001

Europa: Stockholm Summit
EU: Swedish Presidency

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