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Last Updated:  Sunday, 23 March, 2003, 17:24 GMT
EU calls for modernisation
The Spanish Prime Minister and Foreign Minister, with European Commission President Romano Prodi (centre)
The summit agreed to send $10m of aid to Iraq
EU leaders have called for new efforts to reform Europe's economy despite a slowdown in growth and uncertainty caused by the war in Iraq.

A final statement from the EU summit in Brussels says it is time to translate the promises made in Lisbon three years ago - to make the EU the world's most competitive economy by 2010 - into action.

The summit was overshadowed by disagreements over Iraq.

The French and British leaders held a brief meeting on the sidelines of the summit on Friday, where they acknowledged their differences but agreed on the need to work together.

Economic uncertainties and global political risks weigh heavily on the short-term outlook
Summit draft statement
However, UK Foreign Secretary Jack Straw said that he stood by his accusation - bitterly disputed in Paris - that France had prevented a peaceful settlement of the Iraq crisis.

The leaders agreed on Thursday to send $10m of emergency aid to Iraq, but at France's insistence there was no explicit mention in the communique of help with reconstruction.

Economic shadow

They did, however, say that the UN should play a central role in the co-ordination of post-conflict assistance to Iraq.

Full and effective disarmament of Iraq
Central role of UN during and after conflict
Commitment to sending humanitarian aid
Work towards re-invigoration of the Middle East peace process
Strengthening of the transatlantic partnership

The summit's final statement acknowledged the economic shadow cast by the Iraq conflict.

"The European Union is currently facing... a slowdown in growth and job creation," it says.

"Economic uncertainties and global political risks weigh heavily on the short-term outlook and have delayed recovery."

The statement says the EU has made "considerable progress" on the goals set at Lisbon, including:

  • freeing up energy markets
  • single air-traffic control
  • modernised competition policy
  • EU-wide financial markets
  • EU-wide patent

However, it adds that there is still a lot to do.

The document also repeats a call for closer co-ordination of national budget policies.

Inner core

This follows criticism of France, Germany and Portugal for allowing their budget deficits to overshoot limits laid down in the EU's Stability and Growth pact.

In other developments, the EU leaders:

  • Pledged support to the new administration in Serbia, following the assassination of Prime Minister Zoran Djindjic last week
  • Called on the Turkish Cypriot leadership to reconsider its rejection of the UN peace plan for the divided island
  • Asked European governments and the European parliament to help ensure that the timetable for EU expansion is met

On the sidelines of the summit, the three countries most strongly opposed to the US-led war in Iraq - France, Germany and Belgium - also announced they would hold a summit next month to discuss closer defence integration.

Correspondents said the move appeared to suggest the creation of an "inner core" to press ahead with a more integrated foreign and defence policy.

The Belgian Prime Minister Guy Verhofstadt, who announced the plans to the Belga news agency, said other states could attend - but he made no mention of the UK, which is currently fighting in Iraq alongside the US.

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