Failures give EU leaders some good talking points

EUROPEAN LETTER/Denis Staunton: The smoky-voiced German torch singer, Hildegard Knef, who died last month aged 76, took a commendably…

EUROPEAN LETTER/Denis Staunton: The smoky-voiced German torch singer, Hildegard Knef, who died last month aged 76, took a commendably relaxed approach to the ups and downs of her long, turbulent life. Once Germany's most promising star in Hollywood, she ended her life in poverty, making ends meet by selling her story to the newspapers again and again.

"Success and failure are both overrated," she said. "But failure gives you more to talk about." If this is true, EU leaders ought to have plenty to say when they meet in Barcelona on Friday.

The leaders will assess their progress in fulfilling a 10-year plan agreed in Lisbon two years ago to make the EU "the most competitive and dynamic knowledge-based economy in the world". As they consider a range of initiatives that have become bogged down in disagreements between governments, they will find little to celebrate.

An attempt to create an EU-wide patent has been blocked by a dispute over which languages should be used by a European patent office. And German opposition to a plan to make cross-border, corporate takeovers easier led to the proposal's defeat in the European Parliament after 12 years of negotiations.

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The Spanish Prime Minister, Mr José Maria Aznar, and the Commission President, Mr Romano Prodi, hoped that this week's summit would agree to liberalise Europe's energy industry. But France has made clear that it will veto complete deregulation, which is opposed by some of the country's biggest trade unions.

The leaders will probably agree a compromise under which France would open up its market for business users of electricity to foreign companies but would preserve the state monopoly on supplying households.

Mr Aznar and Mr Prodi have strong allies in Britain's Mr Tony Blair and Italy's Mr Silvio Berlusconi, both of whom are keen advocates of deregulation. The Taoiseach, Mr Ahern, is also enthusiastic about the Lisbon agenda and Ireland has been quicker than many member-states to break up state monopolies.

But French and German reservations about parts of the Lisbon agenda highlight a popular resistance in Europe to moving too far towards an American economic model. Most Europeans who care about such things would like the EU to be as productive as the US but few are willing to embrace all the free market values economists claim are necessary to close the transatlantic gap.

The Commission, which is often accused of being out of touch with Europe's citizens, has shown itself to be sensitive to the conflict between the need for market liberalisation and workers' desire for security. And it has drawn criticism from employers for proposals to strengthen the rights of temporary and part-time workers.

Irish and British employment agencies are worried about a draft directive that would give temporary workers many of the rights enjoyed by permanent staff, including holiday pay and redundancy rights. The proposal would oblige agencies to calculate temporary workers' pay on the basis of salaries paid to permanent staff in each company. And it would ban the use of employment agency workers in some areas of the public sector.

The agencies argue that the new rules are too cumbersome to be workable and would make companies reluctant to use temporary staff, many of whom are working mothers and others who might not otherwise be part of the workforce.

They want national governments to be allowed to set their own rules for employment agencies and they oppose the ban on agency workers in some sectors.

The Commission's proposal is still at an early stage and it is likely to be amended before it becomes law. But it reflects a real fear in many member-states that European companies will be tempted to outsource more of their employment and that employees could soon be treated as a commodity like any other. Europe's market liberals received their biggest blow so far this year from an unlikely source - President Bush's White House.

Mr Bush's decision last week to slap steep tariffs on steel imports provoked outrage in European capitals and charges of hypocrisy from Brussels.

But the US retreat into protectionism has encouraged critics of the present system of global capitalism who believe that the market needs more rules to diminish inequality and protect the rights of individuals. Groups such as Attack and Globalise Resistance are expected to travel to Barcelona to make their views heard.

They may have more to cheer about than the leaders meeting inside the conference chamber.