International

E.U. meet on reforms in energy sector

By Batuk Gathani

BRUSSELS, MARCH 12. On the eve of this weekend's summit of the 15 European Union heads of government at Barcelona, Mr Romano Prodi, the President of the European Commission has stated that liberalisation of the European energy market may be agreed upon.

Mr Prodi brushed aside concern that France, which faces presidential elections in a few weeks, may vote against the energy programme for the second year running. France wants the summit to focus on social issues and has called for changes to tax and social policies to accompany any agreement on energy liberalisation. The summit will also test the credibility of the proposed pan-European economic reforms programme.

Mr Prodi is confident of "real progress'' and expects France to fall in line with other E.U. member states, since the European Commission _ the administrative arm of the E.U. _ has powers to use Article 86 of the E.U. treaty. This allows the European Commission to impose liberalisation norms on public sector companies providing services of general interest. Hence, the common perception is that the E.U.'s non-household markets could soon be liberalised. Mr. Prodi describes this as "a very major step'' which would cover more than half the E.U. market. The strategy is to make European manufacturing more competitive with lower energy costs.

The last summit was derailed by French and German opposition to liberalisation of electricity and gas markets, which some observers suspect was done to protect the their established energy providers. Mr. Prodi is confident that a breakthrough is possible and the E.U. will be moving towards opening of electricity and gas markets for all consumers _ both private households and commercial establishments _ by 2004. The summit will also attempt to strengthen economic policy coordination which include harmonisation of company and private taxation with a common European benchmark.

Mr Prodi said the progress achieved in market liberalisation in the E.U. countries now justified the European Commission concentrating on research, labour mobility and pension reforms at both national and European levels. Mr. Prodi warns that if the E.U. states do not make a "breakthrough" on research budgets and fail to create a few centres of excellence , the European companies may lose their competitive edge in the global market.

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