Yet another capsized EU summit

EUROCOIN.KOMMISSIONEN.jpg Amidst leaving presidents and general economic pessimism, it was always difficult to imagine the EU service directive (Bolkenstein) go through in its intial form as it was equally difficult to imagine that the European leaders could agree to open up their energy markets. However, these two things have been the primary agenda on the European summit in Brussels ending today. See also the Economist on the topic.

Apparently the European leaders did agree to some kind of a deal on the issues above;

"European Union leaders on Friday ended their acrimonious battle over the liberalisation of the bloc’s services market, clearing the way for the early adoption of a watered down bill to increase cross-border competition.

Angela Merkel, German chancellor, and Jacques Chirac, French president, warned liberal colleagues at a summit in Brussels that the entire services directive would be lost unless they accepted a diluted compromise version.

EU leaders also backed the drafting of a common energy policy and pressed for tougher renewable power targets in a drive towards greater energy security."

Digging deeper however, we find deep faultlines between European leaders and a lack of willingness to overcome differences. One notable conflict is between France and Italy where the latter is accusing the former of protectionism by denying an Italian energy/utillity company to buy its way into the French market through a hostile takeover.

However, this conflict is not what really matters for Europe. A more pressing problem is the need for reform in almost all major European countries a need which is currently not being addressed and to the extent it is society is rioting and governments are getting second thoughts. Remember the Lisbon Agenda? Do you believe the goals will be achieved? I don't, in fact I think the Lisbon Agenda was always too optimistic in my opinion.

The Lisbon Agenda aside for a moment, Europe is in a political and economic crisis and surges of protectionism are a mirror of this and so, at least to some extent, are France's discontented students. Bottomline is that Europe's large countries need reforms, particularly labour market reforms which seek to address the insider-outsider situation. In Franc we are seing effort, but we are yet to see how this go. Admittedly, reforms are domestic issues and each country demands specific approaches but the bad and ill sentiment in EU fora is not transmitting a foundation on which to push for change.