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Europe

Economy in Spotlight at EU Summit

Jobs and growth will top the agenda at the two-day summit of EU leaders kicking off Tuesday. Another issue up for debate is America's controversial nomination of Paul Wolfowitz as head of the World Bank.

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Economic growth will be the watchword over the next two days

The spring economic summit beginning Tuesday in Brussels will likely start off with a quick approval of a reform of the EU's Stability and Growth Pact, which EU finance ministers agreed upon on Sunday.

According to Luxembourg's Prime Minister Jean-Claude Junker, who will chair the meeting, there will be little discussion and "certainly not any tough debate" on the loosening of the EU deficit rules, which was passed largely thanks to Germany's fierce lobbying efforts.

The rules governing the euro, namely that countries should keep their deficits under three percent of gross domestic product, have not been scrapped. However, the reform will allow the rules to be interpreted more loosely and give governments space to spend more in order to get their economies moving.

Starting the motor

Summit participants aim to focus on Europe's sclerotic economy and look at ways of revving up a motor that has been sputtering for some time now. Leaders say they hope to agree on more business-friendly measures and increased research spending to boost long-term growth.

In 2000, EU heads drew up the "Lisbon Agenda," a strategy paper that has the ambitious goal of Europe becoming the world's most dynamic economy by 2010. The Brussels meeting will take another look at that plan at its half-way mark. The judgment won't likely be too positive. Already last month, the EU admitted that its underperforming economy had made the Lisbon agreement's 2010 deadline impossible to achieve.

Contention

One divisive issue that could cloud the summit is the proposed EU services directive, introduced by former Internal Market Commissioner Frits Bolkestein. The directive, which would greatly liberalize the EU's services market, has run into a wall of protest, both from leaders and the public.

On Monday, French President Jacques Chirac repeated his vocal critique of the directive and Germany's Chancellor Gerhard Schröder has expressed fears that were the directive to go into effect, it would lead to wage dumping.

Demonstration in Brüssel für Soziales Europa

A man shows his shirt slogan as he marches, together with an estimated 50,000 protesters, during a demonstration in downtown Brussels on March 19

On Saturday, 50,000 people demonstrated against the plan in Brussels, arguing the directive will destroy many well-paid jobs in the western part of the EU and end the traditional ways in many professions.

World politics could also invade the economic roundtable as the issue of lifting the EU ban on selling arms to China is called into question again. Britain once against cast doubt on the wisdom of such a move, although abolishing the ban is supported by fellow EU heavyweights Germany and France.

China's recent assertion that it would use force if Taiwan -- which the mainland considers a breakaway province -- formally declared its independence has made it more difficult for the EU to lift the arms embargo, UK Foreign Secretary Jack Straw said.

Controversial nomination

The nomination by US President George W. Bush to head the World Bank will also be discussed by European leaders. When the US leader announced the nomination of Paul Wolfowitz, deputy defense secretary and major architect of the US-led war in Iraq, it was met with private consternation by many in Europe.

Paul Wolfowitz

Deputy Defense Secretary Paul Wolfowitz, President Bush's choice for World Bank President

However, Chancellor Schröder has said Germany will not oppose Wolfowitz's (photo) nomination, saying he thought Wolfowitz could yield positive surprises in his role as the head of the global lending institution and that Berlin could work constructively with him. The Netherlands said it would have liked a wider field of candidates. It is, however, unlikely that the Europeans will try to block Wolfowitz, especially at a time when they are trying to heal the deep rifts with the US that formed over the Iraq war. Tradition has it that the US nominates the head of the World Bank and Europe nominates the head of the International Monetary Fund.

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