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Last Updated: Friday, 29 December 2006, 09:18 GMT
Analysis: Can Merkel fix the EU?
William Horsley
By William Horsley
BBC News Europe analyst

German Chancellor Angela Merkel
Mrs Merkel has proven to be a skilful negotiator in the EU
Chancellor Angela Merkel has chosen the motto "succeeding together" for Germany's six-month EU presidency starting on 1 January - at a time of weak morale in the EU.

On the plus side, the EU is celebrating the entry of Romania and Bulgaria as new members, its economy is picking up and it claims global leadership on issues like climate change.

But some European leaders fear the Union is close to paralysis. Its flagship economic reforms have largely stalled. Its populations complain of enlargement "fatigue".

The risk of terrorist attack is said to be as high as ever. And Europe's vital relationships with America and Russia need repairing.

Privately, some German officials admit to sleeping badly when they think about the responsibilities they face.

Fresh hopes

Yet there are widespread hopes among EU-watchers that "Angela can fix it".

Mrs Merkel earned plaudits for her role in mediating a timely agreement on the EU's long-term budget at a summit a year ago.

Now Germany, as Europe's largest nation and biggest economy, is being asked to revive the EU's faltering sense of purpose.

Foreign Minister Frank-Walter Steinmeier says the German presidency expects to spend a lot of energy responding to unforeseen crises on the EU's behalf. But he has named three ambitious goals:

  • Progress towards a new European constitution or set of decision-making rules, despite the rejection of a constitutional treaty by voters in France and the Netherlands
  • Beefing up the EU's common foreign policy, to show that Europe can be effective in tackling the world's most dangerous conflicts
  • Finding answers to the looming threat to Europe's energy security, as well as climate change and other long-term challenges.

Constitutional confusion

Sorting out the constitutional confusion looks a forlorn hope, as any new proposals may deepen existing splits among EU nations rather than heal them.

French No ballot slip for EU constitution referendum
Deep divisions persist in the EU over the constitution
Mrs Merkel wants to save as much as possible of the original draft treaty, which provided for an EU president and foreign minister at the head of new structures for common European internal and foreign policies.

At a special leaders' meeting on 25 March 2007, 50 years after the signing of the Treaty of Rome, she will issue a "Berlin Declaration", in an attempt to re-inspire Europeans with the ideal of continent-wide integration and to map out Europe's common challenges.

The wording must be agreed by consensus and will be a pointer to the EU's appetite for treaty reforms.

A rival event will also mark the EU's 50th birthday: a celebration football match is to be played on 13 March between the two-time Champions' League cupwinners Manchester United and a star "Europe Eleven" made up of players from across Europe.

Chances are there will be more popular interest in the exhibition game than in the re-heated talk of a constitution.

In June, Mrs Merkel is to present a more substantial "roadmap" on future treaty reforms. But little movement can be expected until after France's parliamentary and presidential elections in May.

Foreign policy dilemmas

Germany aims to counter troubling developments in the former Soviet Union, the Middle East and elsewhere.

French troops with the United Nations Interim Forces in Lebanon
France is spearheading the UN peacekeeping mission in Lebanon
But in recent years the EU's sorry internal divisions have brought a sense of drift.

The Germans are themselves involved in a damaging split: Poland and the Baltic states strongly oppose the strategic deal done by former German Chancellor Gerhard Schroeder and Russia's President Vladimir Putin in 2005 to build a new North European gas pipeline under the Baltic Sea. It will supply customers in Western Europe, bypassing Poland, the Baltic states and Ukraine.

Since then Russia's robust use of its vast energy resources as a foreign policy tool has thrown prospects for a strategic EU-Russia partnership agreement into doubt.

And the unsolved murders of several high-profile opponents of Mr Putin have led the Europeans to question whether this Russian leadership is committed to respecting civil rights and the rule of law, or even wants to be a constructive partner.

Angela Merkel has responded by telling Mr Putin diplomatically that Russia's own interests lie in democratic reforms and accepting international commercial rules.

But Mr Putin has proved intolerant of any criticism of his tightening grip on Russia's energy industry and its political life.

Mrs Merkel says a top priority will be to improve the EU's relations not only with Russia but also with countries like Ukraine and Georgia in Europe's "New Neighbourhood", which have complained of Russian bullying.

She also plans an initative to stabilise Central Asia - the large, energy-rich former Soviet republics like Kazakhstan.

In the Middle East, any breakthrough towards peace under the influence of Germany's EU presidency would be a surprise.

Mrs Merkel wants, with other members of the international Quartet, to revive the "roadmap" for peace between Israel and the Palestinians. And she has one advantage - good personal relations with US President George Bush.

But with the US deeply embroiled in Iraq, her ambitions may have to be limited to containing the many conflicts in the region and cajoling the main EU players to bury their long-standing policy differences. Only then might Europe become a credible diplomatic force in the Middle East.

Energy scares

Energy shortages top the list of long-term threats to European security which Angela Merkel means to tackle.

Flag outside Gazprom HQ in Moscow
The power of Russian energy giant Gazprom worries EU members
A year ago, Russia's cut-off of gas to Ukraine hit supplies to much of Western and Central Europe.

At the EU's summit in early March Mrs Merkel is to present an Energy Action Plan, with proposals for protecting Europe against future energy disasters.

Widely divergent national energy policies within EU states now stand in the way of a common energy policy. Again, Germany may be part of the problem as well as the solution.

While France and some others intend to depend more on nuclear power for their future energy needs, Germany has turned its back on building new nuclear power stations, for environmental reasons.

And while Britain, Sweden and other countries have pressed for Europe-wide deregulation of energy monopolies, Germany and France still resist opening up their own networks to allow common electricity or gas grids to work for the benefit of all.

Other key dossiers for Germany include counter-terrorism, migration, better integration of Muslim minorities inside EU states, and resuming Turkey's membership negotiations after a bitter row over Cyprus.

Mrs Merkel and her team plan to have a joint work programme with Portugal and Slovenia, which will be taking over the chair of the EU in the next two half-year periods.

Despite the mountain of problems much of Europe looks with hope to Mrs Merkel's lead.

Not only is Germany big enough to get things moving. But Angela Merkel, in her tactful way, has also chastised other European leaders for their lack of courage in taking decisions.

"The EU sometimes works in such a way that nobody takes responsibility for what has been decided," she complained in a recent TV interview. "More responsibility and clarity will help us."

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