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EU maps route to dynamic US-style growth

LISBON: European Union leaders prepared on Friday to approve a sweeping package of reforms to plug their economies into the global technological revolution and make them better able to compete with the United States.

In a 17-page draft, due to be approved by the 15 countries on the final day of a two-day summit, government leaders set themselves "a new strategic goal for the next decade" to promote growth and cut unemployment.

The aim was "to become the most competitive and dynamic knowledge-based economy capable of sustainable economic growth with more and better jobs and greater social cohesion," said the document, a copy of which was obtained by Reuters.

The meeting, dubbed the dot.com summit because of its special focus on meeting the challenges of the so-called new economy, came close to being overshadowed by debate over Austria's political ostracism by its 14 EU allies.

But at dinner on Thursday night, Austrian Chancellor Wolfgang Schuessel was told by his partners there was no chance of a quick end to a freeze on bilateral ties imposed after he formed an alliance with the far-right Freedom Party.

SANCTIONS ON SERBIA PRESERVED

With Friday being the first anniversary of the start of NATO's air war to expel Serbian forces from Kosovo, EU leaders also pledged to maintain selective sanctions on Serbia for as long as President Slobodan Milosevic remained in power.

"With that perspective the (European) Union will maintain its pressure for democratic change in Serbia," the draft said.

Earlier this week, EU foreign ministers endorsed plans to lift a ban on air links with Yugoslavia but tighten financial sanctions to increase pressure on Milosevic, whom the bloc considers the main obstacle to democracy in Serbia.

European leaders have watched with envy the performance of the United States, where a swift embrace of new technologies has fuelled explosive economic growth. But they are also keen to retain the EU's network of social protection.

At the Lisbon summit, they agreed a series of measures to further liberalise internal markets, particularly telecommunications, and give considerably cheaper access for all to the Internet.

The president of the European Commission, the bloc's executive arm, Romano Prodi said that he was delighted with the outcome of the meeting.

"I am more than happy. We have succeeded in putting (in place) clear action and targets. It is not only an act of goodwill but really precise action," he said in an interview with Irish television.

LABOUR COST CUTS EMPHASISED

Cuts in labour costs as well as greater support for small- and medium-sized business were also seen as vital to the strategy's success.

The EU said that its plan should ensure that average annual growth of "around three percent should be a realistic prospect for the coming years". This would be significantly higher than the bloc has achieved in the recent past.

The aim would also be to raise the level of employment within the bloc, the world's largest free trade area, to an average 70 percent of the working-age population -- similar to that of the United States -- from around 61 percent currently.

But in apparent deference to the bloc's central bankers, neither the growth nor employment goals were defined as binding on member states. "If the EU sets a growth target, that is not a good sign for central banks," European Central Bank chief economist Otmar Issing said on Thursday.

In a sign that the ideological struggle between the more liberal and the more interventionist wings of the EU has still to be resolved, France dug in its heels over plans for a faster liberalisation of energy and transport markets.

Delegates said that Prime Minister Lionel Jospin had warned the summit that moving too quickly in these areas could trigger social unrest in France.-Reuters