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EU Unveils Plans to Re-Launch Economic Reforms

Five years ago, the EU adopted what it called the Lisbon Agenda, a bold plan to become the world's leading, knowledge-based economy by 2010.

But the new European Commission under former Portuguese Prime Minister Jose Manuel Durao Barroso has dropped that idea because it is simply not realistic.

Europe's growth and employment rates have lagged behind those of the United States for the past decade, and there is strong political and trade union resistance in many European countries to any effort aimed at liberalizing labor markets and overhauling expensive welfare systems.

On the same day that new figures were released showing that unemployment in Germany, the EU's biggest country, is now at its highest level since the 1930s, Mr. Barroso told reporters that economic growth and job creation are going to take priority over everything else, including social services and environmental considerations.

"This is what really matters to our citizens, growth, employment," he said. "This is the first concern in public opinion of all the 25 member states. It comes in the first place when we ask people 'what is your major concern today?' They say employment, the economic situation.

"So that's why, if you want to connect citizens with European institutions, you should look at what really matters to them," continued Mr. Barroso. "That's why we put this as the priority."

Mr. Barroso's aides say the European Commission will from now on evaluate such cornerstones of EU policy as social protection and tough environmental standards on how they affect economic competitiveness. The EU chief wants to free business from onerous regulation, pump more money into research and development and modernize pension and healthcare systems.

He is asking member states to take more responsibility for reforms but says Brussels will monitor their progress closely. He is especially adamant that the EU move faster to free up Europe's single market for services, especially in telecommunications, energy and transportation.

Predictably, Socialists, Communists and environmentalists have reacted to the new proposals unfavorably, calling them a worrisome step backwards. Some leftists say Mr. Barroso is ditching Europe's vaunted culture of social welfare and ignoring the success of Scandinavian countries whose economies have outstripped the European norm despite high welfare costs.

But Mr. Barroso says that, if the EU economy does not grow faster, it will no longer be able to afford its generous social service and welfare systems.