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Sunday, Sept. 12, 2004

New EU gears could grind

LONDON -- Jose Durao Barroso, the next president of the European Commission, faces many difficult challenges. He will need all the support he can get from the governments of the enlarged community of 25 states.

In the previous commission, the larger states had two commissioners. In the new commission, each state will have one commissioner. These include former prime ministers like Barroso (Portugal) as well as former senior Cabinet ministers. Many of the new commissioners, such as Peter Mandelson of Britain, are highly ambitious politicians.

Barroso will need exceptional skills to weld together such a disparate group, some of whose members may not have adequate English- or French-speaking ability and will want to use their native language whenever possible. Traditions and legal systems, especially in the newly joining countries, are very different and it will not be easy to bridge the differences.

Before even taking up his post, he has been subjected to strong pressures, especially from France and Germany, to advance particular agendas. Barroso has so far resisted these pressures and seems determined to be his own man. But France and Germany, having regarded themselves as the main axis around which the community has been built, may well be tempted to challenge Barroso's position if they feel that their interests are being neglected.

A major problem will be how to work with the elected European Parliament and ensure that the union is seen to be properly accountable to the European electorate. The European constitution has to be ratified and referendums held in countries such as Britain and France (and possibly Germany if the German Federal Constitution is amended to allow referendums), where significant groups oppose the proposed European constitution and express skepticism about the work of the commission and, indeed, the value of the European Union.

Much of this skepticism is unjustified, but Barroso will have to show that he is a master of public relations as well as a master in his own Cabinet. So far he has started out well and impressed the members of the European Parliament who endorsed his appointment.

Political and economic issues are inevitably intertwined in Europe, and none of the economic problems the EU faces is without political implications. One of the most important economic issues is to carry forward the Lisbon agenda to make Europe the most competitive economy in the world by 2010. If this is to be achieved, labor markets must be deregulated so that more jobs are created and unemployment reduced. Inevitably these are tasks primarily for member governments, and the commission can do little more than cajole and nag.

The Common Agricultural Policy (CAP) is less of a threat to world trade in agricultural products than it was in the past, but too much of the union's budget still goes toward farm subsidies. More root and branch reform is needed.

Unfortunately, the German and French governments have united to delay reforms to protect their feather-bedded farmers. The new commission will have an uphill battle to persuade these two governments, who act aggrieved that their commissioners were not given the top portfolios that they had sought.

Another politico-economic problem is the budget. Poorer countries want a bigger budget to ensure that regional grants are not reduced even as the CAP continues to absorb a large part of the budget. Austria, Britain, France, Germany, the Netherlands and Sweden on the other hand want spending frozen at 1 percent of the EU's gross national income.

The British, who feel that they may be forced to pay much more into EU programs than they get back, are determined not to sacrifice the rebate that former Prime Minister Margaret Thatcher, wielding her famous handbag, achieved for Britain. But other countries resent the rebate and do not recognize that reducing it would make it more difficult for EU supporters in the British referendum on the new constitution.

Another highly contentious issue is the future of the stability and growth pact, which underpins the European-single currency. France, Germany and other countries have repeatedly breached the pact's rules, arguing that it needs to be made more flexible. But it will not be easy to find a formula satisfactory to all countries that will not undermine the strength of the single currency.

The Doha round of trade negotiations under the World Trade Organization, in which Britain's Mandelson as trade commissioner will have a major role to play, will present difficult problems of how to coordinate the disparate interests of the European states. The United States will be a key player in these negotiations. Good relations need to be maintained with the U.S., but that will not be easy following recent WTO rulings allowing retaliation against unfair U.S. trade practices.

Trade is only one aspect of trans-Atlantic relations requiring attention. European relations with the U.S. were badly damaged by disagreements over Iraq. Barroso supported the U.S. in the war, but any efforts he makes to build a better relationship are liable to be undermined by anti-French rhetoric from the Republican Party in the U.S. presidential election and by European reactions to the ineptitude of U.S policy in Iraq and the apparent American disregard for human rights concerning prisoners in Iraq and at Guantanamo Bay, Cuba.

If, and when, the European constitution is approved, Javier Solana, the European foreign policy supremo, will move back to the commission, but he may not find it altogether easy to work under Barroso's leadership.

Another difficult political problem is posed by the Turkish application to join the union. This presents particular difficulties for Greece and Cyprus. Turkey is a Muslim country, and only a small part of the country is in Europe. Turkey has made significant progress in building democracy and protecting human rights, but the Kurdish problem has not yet been solved. It remains to be seen whether agreement can be reached among current EU members on the admission of Turkey and on the terms that will have to be negotiated with Turkey.

The threat from terrorism, and with it the problems caused by migration and asylum seekers, will continue to be major issues for all member states. Signor Buttiglione, the Italian commissioner, has been given the task of coordinating the European response. Terrorism is sadly likely to be the main threat to European countries for years to come.

All of us who want to see a prosperous and peaceful Europe wish Barroso well and hope that he can succeed in meeting the huge challenges he faces.

Hugh Cortazzi, a former British career diplomat, served as ambassador to Japan from 1980 to 1984.

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