European Union leaders struggled yesterday to breathe life into a 10-year plan to make Europe more economically competitive. But France remained firm in its opposition to a key element of the plan, the deregulation of the energy industry.
The French Prime Minister, Mr Lionel Jospin, told the EU leaders at a meeting in Barcelona that Paris would consider opening up its energy market for business customers but not for private households.
"France can only accept a degree of opening to competition if solid guarantees are agreed in Barcelona, both on the reality of what opening up markets means and on public service needs.
If there is agreement on a balanced set of priorities, France could accept the principle of opening up gas and electricity markets to business customers two years after the adoption of a directive," he said.
With French presidential and parliamentary elections only six weeks away, neither Mr Jospin nor President Jacques Chirac want to antagonise powerful unions that oppose energy liberalisation. Other EU member-states are angry that France, whose state-owned electricity company has moved into a number of neighbouring countries, is dragging its feet on full liberalisation.
The leaders were meeting amid tight security as Spanish police battled with protesters in the centre of the city. Riot police broke up a gathering of anti-globalisation protesters along the historic Ramblas avenue in the city's old town.
Yesterday's demonstrations were considerably smaller than Thursday's protest by European trade unionists which attracted tens of thousands of people.
EU leaders admitted that progress on their economic reform plan has been slower than they wished and Denmark's Prime Minister, Mr Anders Fogh Rasmussen, whose country takes over the EU Presidency from Spain in July, accused his partners of lacking the political will to change.
"There is a growing gap between the EU and the United States, both economic and technological. If there was a political will this could be a very important summit . . . There is a bit too much foot-dragging when it comes to the political will to see through reforms in Europe," he said.
Over dinner last night, the leaders were due to discuss foreign policy, particularly the crisis in the Middle East. They were to consider a draft paper calling on Israel to withdraw completely from Palestinian territory and expressing support for the Saudi peace plan for the region.
Under the Saudi plan, Israel would withdraw to its 1967 borders in return for recognition and security guarantees from its Arab neighbours.
The leaders were also expected to condemn the conduct of last weekend's presidential election in Zimbabwe and to consider further sanctions against President Robert Mugabe.
The EU celebrated a triumph for its foreign policy yesterday when the leaders of Serbia and Montenegro joined them for lunch. The EU's foreign policy chief, Mr Javier Solana, has brokered a deal between the two states that would dissolve the Federal Republic of Yugoslavia and replace it with a new federation of Serbia and Montenegro.
The Spanish Foreign Minister, Mr Josep Pique, said the EU would give its full backing to the new federation. "This is a fantastic piece of news. This is the only way to guarantee the future of Serbia and Montenegro, and the whole region," he said.
The British Prime Minister, Mr Tony Blair, was expected to sound out other leaders on their attitude to a US-led military strike against Iraq. There is little support among EU states for such a campaign and Germany's chancellor, Mr Gerhard Schröder, said yesterday there was no question of German forces taking part in any action against Iraq without a United Nations mandate.
