Swedish Summit faces derailment

In this story: Energy: UK and France rift Question over Kaliningrad RELATED STORIES, SITES

By Robin Oakley, CNN's European Political Editor

LONDON, England (CNN) -- Sweden's attempts to make economic reform a priority in its first term as president of the EU looks set to be hijacked by leaders' domestic elections and the growing unrest in Macedonia.

Sweden's Prime Minister Goran Persson will play host to the European Union summit due to open in Stockholm on Friday, March 23.

He had hoped to stimulate reforms which would lead to cheaper electricity prices, phone calls and air fares across Europe.

But as the Swedes seek to prove that they can make an impact during their first term holding the EU presidency jostling by other leaders facing early elections could prove a bar to progress.

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The EU leaders may also be diverted from the economic aims of this summit by their concerns over fighting between troops belonging to the Former Yugoslav Republic of Macedonia and ethnic Albanians.

And fears at the spread of foot-and-mouth disease to the Continent; as well as talks with the summit's special guest Russia's President Putin.

The Stockholm Summit is to review what has been done to supplement the 15 countries' aims, expressed a year ago in Lisbon, to transform the EU economy by 2010 into the most dynamic and knowledge-based economy in the world.

It will be judged on what progress has been made in job creation, welfare reform and in dismantling jealously-guarded national barriers in such markets as energy, financial services, postal services and air traffic.

Energy: UK and France rift

The energy sector, one of the biggest pieces of unfinished business in the European single market, will be a crucial test of the pace of progress.

EU regulations say countries must open at least 30 percent of their electricity supply and 20 percent of gas supply to competition.

Currently, only 8 per cent of EU electricity supplies are traded across borders, not enough to have a serious effect on national price structures.

The European Commission has published proposals for full liberalisation by 2005.

The governments of France and the UK look set to clash over energy liberalisation, designed to engineer cheaper electricity and gas. The British Government, approaching an imminent election, is keen to be seen battling for cheaper prices for consumers.

British Prime Minister Tony Blair is demanding full liberalisation by 2003, while his French counterpart Lionel Jospin, likely to challenge Jacques Chirac for the Presidency next year, does not want to be restricted by dates.

Jospin has used doubts about energy supply privatisation raised during the current Californian black-outs to bolster his case.

He said: "You also have to consider equal access, the safety of networks, how you can supply the consumer at the best price with security of supply."

The French instead complain that the UK is going slow on liberalising postal services.

One key test of progress towards the 'new economy' is provided by the report to finance ministers by Baron Alexandre Lamfalussy proposing reforms in the regulation of financial services.

He wants a fast-track process under which a committee of finance ministers from the EU countries would swiftly produce new regulations to cope with any new product or change in the markets.

But the European Parliament may delay creation of a single market in financial services because it wants to retain powers to scrutinise such laws.

Another proposal to be considered in Stockholm is for the creation of a business-led task force to identify what skills are needed by the new "knowledge economy" to see that EU countries' education systems are geared to provide them.

The European Commission has begun measuring national efforts in economic reform.

It has set up a task force to encourage labour mobility and it has produced proposals on cutting red tape.

The Swedish Presidency is hoping to give a stimulus to the enlargement of the EU by the time it hosts its second summit in Gothenburg in June.

Question over Kaliningrad

Enlargement raises worries for Russia, and with Baltic countries taking a keen interest in the EU's relations with Russia Persson has invited Putin for talks with the EU leaders in Stockholm.

Persson says that it is essential to co-operate with Russia on the environment, another focus of the Swedish presidency, and on tackling crime.

He adds: "Active assistance to Russia is necessary to guarantee stability and security in Europe."

One detailed question for discussion is the future of the Baltic port of Kaliningrad which, with the enlargement of the EU to include Poland and Lithuania , will in time become a Russian enclave within the EU borders.

Russia and the EU have to sort out key questions on the movement of people, power supplies and fisheries.

Kaliningrad is also a key defence base for Russia.

Russia's Deputy Foreign Minister Ivan Ivanov has worried publicly "We cannot say we are very close to some of the (EU) candidate countries."

One other concern for the Swedish authorities is that of street protests in Stockholm. The Swedish security services have made efforts to penetrate organisations likely to seek disruption of the summit.

Swedish police say they are prepared to cope with violent anti-globalisation protests of the kind which marked the World Economic Forum in Davos in January; the French Euro summit in Nice in December; and the World Trade Organisation meeting in Seattle in December 1999.

More than 1,000 police will be deployed to protect the two-day summit meeting.

Macedonia: A Balkan timebomb?
March 19, 2001
Foot-and-mouth reaches Netherlands
March 21, 2001

Europa: Stokholm Summit
EU: Swedish Presidency

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