Page last updated at 19:40 GMT, Friday, 14 March 2008

Analysis: Reality check for EU

By Paul Kirby
BBC News, Brussels

Jose Manuel Barroso, 14 March 2008
The EU Commission president was in upbeat mood
For the European Union's 27 leaders, the challenge of the Brussels summit was the urgent demands of climate change and instability in the world's financial markets.

European Commission President Jose Manuel Barroso told reporters "the EU has passed the reality test".

He was upbeat on the response so far to the financial turmoil.

"There is a real reason for confidence in our ability to weather the storm," he said, praising the actions of the European Central Bank since the credit crunch arrived in autumn 2007.

The leaders decided the main responsibility for dealing with the problems lay with the private sector. But the EU was ready to "take regulatory and supervisory actions" when it had to.

United front

But even with the most urgent challenges, the EU's wheels of change turn slowly.

The deadline for agreeing measures aimed at hitting the 2020 target of a 20% cut in carbon emissions compared with 1990 levels is the end of 2008. And that is before the European Parliament touches them.

Japanese businessmen looking at share prices after a fall in Tokyo, 13 March 2008
The EU is confident it can weather the credit crunch storm

EU leaders are very keen to present a united front to the UN conference in Copenhagen in 2009 where a successor to the Kyoto Protocol will be sought.

The idea is that if 27 European countries have signed up to big cuts in emissions, significant use of renewable energy and a revitalised emissions trading scheme, then the rest of the world will follow suit and maybe even push for more.

'Green goods'

A significant part of the summit was taken up with finding ways of keeping energy-intensive industries such as steel from abandoning Europe in search of cheaper, less environmentally-conscious countries.

It is very much the big picture and affects us all. But not as much of a reality test as the price of fridges, dishwashers and washing machines
Socially, European leaders are aware they would lose out because thousands of jobs would go. Environmentally, the EU would be scoring an own goal because the greenhouse gases would merely shift to another part of the world.

It is very much the big picture and affects us all. But not as much of a reality test as the price of fridges, dishwashers and washing machines.

So, by persuading their colleagues that a cut in sales tax or VAT should be considered for green-friendly appliances and energy-efficient homes, UK Prime Minister Gordon Brown and French President Nicolas Sarkozy scored something of a victory.

President Sarkozy of France, 14 March 2008
The French president backed Mr Brown's green VAT proposals

"I am convinced that reduced rates of VAT is one way to boost clean products," said Mr Sarkozy, adding that the public was mystified why a clean car could cost more than one that polluted.

Any change to VAT requires all 27 member states to go along with it, but Gordon Brown said "very substantial progress" had been made in just two days.

That substantial progress seems to have been made in just a few hours as, late on Thursday night, the commission president said there was some doubt over whether sales tax was the correct instrument to increase incentives for environmentally-friendly goods.

Rare slip

The French president was very much the centre of attention at the spring summit because of his plan for a Mediterranean Union, which survived but in a much stripped-down form.

There were fears that France was trying to take a commanding position in Europe's relations with North African countries and Israel, and anger from Turkey that Mr Sarkozy could be trying to offer it up as a sop for rejection from the EU.

Relabelled "The Barcelona Process: Union of the Mediterranean", it has now been re-cast as an upgrade of an existing partnership launched in 1995.

Slovenian PM Janez Jansa, 13 March 2008
Slovenian PM Janez Jansa made a gaffe but corrected it
Paris hopes to turn the focus from funding trade and cultural ties towards practical measures such as cleaning up the sea and fighting forest fires.

Slovenian Prime Minister, Janez Jansa, risked starting a fire of his own when he was asked whether Turkey had been an issue during discussion on the so-called Club Med.

"The issue of Turkey wasn't raised," he told reporters.

Once the leader of the EU Presidency realised that his comment could be interpreted as a potential snub to Ankara, Mr Jansa made it clear that the Mediterranean Union would not be considered as a substitute for EU membership.

It was a rare slip in an otherwise well-choreographed event.

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