French take energy deal away from low-key summit

Date: 21/03/02

By Peter Chapman

FRANCE'S embattled President Jacques Chirac and Prime Minister Lionel Jospin emerged as victors at last weekend's Barcelona economic summit after they clinched a deal on energy liberalisation that would not alienate French voters.

Under the accord, which was the linchpin of a low-key meeting, EU leaders backed opening the market for commercial users of gas and electricity in 2004.

Crucially, a decision on when to open up the politically more sensitive household sector was put off until next year's Spring summit at the latest - long after this year's Presidential elections which conclude on 5 May.

The deal means the two French adversaries will avoid the risk of claims by unions that liberalisation will cost jobs at Eléctricité de France, the state-owned energy giant, or harm cherished levels of public service.

The compromise also allows the French pair to claim that they warded off a Commission threat to deploy rarely used competition powers to open up the market by decree. Irish Finance Minister Charlie McCreevy said: '[The French] didn't want anything that could be interpreted - even in the slightest way - as being controversial...or cause them embarrassment.'

In another energy quid pro quo, leaders agreed to French demands for a new 'framework directive on services of general interest' that would set out the scope for governments to intervene to ensure customers get a fair deal and high quality of service once markets are opened.

But Commission spokesman Gilles Gantelet said: 'In French we would say, 'ça ne mange pas de pain' [that doesn't eat bread], meaning that it would have very little material impact on the legal framework, beyond clarifying existing rules in the EU's founding treaty.

Highlights in a summit devoid of other major deals or rows included:

• Energy tax - agreement to reach a deal on nine-year-old proposals for a tax on energy consumption by end of year, though this should take into account 'needs of professionals in the road haulage business'.
• Financial services - the EU should press on at full speed with reforms to create a single market in the sector by 2005.
• Promise for a deal on stalled public procurement rules at May ministerial, with final adoption this year.
• Push for faster reform of EU pension systems.
• R&D spending to be 3 of member states' GDP by 2010.
• Agreement on the Galileo satellite navigation system.
• Labour mobility boosted through more flexible healthcare and pensions systems.
• Promise to tax low-earners less.
• More jobs thanks to reforms of tax and benefit systems - including reduction of early retirement incentives and barriers to women workers.
• Open sky - single EU air-traffic system by 2004.
• Promised widespread broadband internet access by 2005 and to ensure that schools have one internet-connected PC for every 15 children.
• EU 'Community Patent' - ministers urged to reach a deal in May.

Highlights of the European Council, Barcelona, 15-16 March 2002.