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EU Leaders Pledge Economic Stimulus, Reforms - 2003-03-21

European Union leaders have reconfirmed their commitment to create jobs and go ahead with reforms to make the EU the most competitive economy by 2010. The development comes at the close of a two day EU summit in Brussels.

In a statement, EU leaders said economic uncertainties and global political risks have delayed a recovery in the European Union, and fighting unemployment should become a top priority. Greek Prime Minister Costas Simitis, whose country holds the EU presidency, said improvements in labor markets are crucial.

"Our first attempt is to increase employment and social cohesion through specific measures that will concern tax reform, incentives for integrating people into the labor market, the possibility of labor markets to adjust," Mr. Simitis said.

The 15-country European Union reported a 7.9 percent unemployment rate in January. The EU statement said lowering unemployment will require far reaching structural reform to increase productivity. It said that cutting bureaucracy and restrictions on hiring and firing should be implemented to make the job market more flexible. In addition, tax benefits and other incentives should be introduced for business.

German Chancellor Gerhard Schroeder recently announced that he wants to push such labor reforms in his country, which is going through a serious economic crisis, with unemployment running over 11 percent.

Meanwhile, the summit also discussed how to help Iraq in the aftermath of the war. British Prime Minister Tony Blair said such aid is crucial. "We were able to agree here that Europe will play a continuing and important role rebuilding Iraq in the post-Saddam era. There is a real understanding that the Iraqi humanitarian disaster is here and now and that the international community will have to come together to repair Iraq," Mr. Blair said.

Though there may be some agreement within the EU on efforts to aid Iraq, by the end of the summit it was clear that tensions caused by the Iraq crisis still remain. When British Foreign Secretary Jack Straw was asked whether he regretted remarks criticizing French threats to veto a second resolution on Iraq, Mr. Straw said, "I stand by the words I have used."

French President Jacques Chirac sought to put the dispute between France and Britain into perspective. Speaking at a news conference after the summit, Mr. Chirac said Europe has never been a bed of roses.