Pact for Competitiveness

The abolition of salary indexation systems, greater harmonisation of member state corporate tax rates and an overhaul of national pension systems are among the measures contained in a Franco-Geman 'Pact for Competitiveness' for the eurozone, put forward at the EU summit on Friday (4 February). Other elements included the insertion of a "debt alert mechanism" into national constitutions, the mutual recognition of educational diplomas and the establishment of national crisis management regimes for banks. Details would then be thrashed out at a specially convened summit of eurozone leaders in March, together with an already-scheduled EU summit later in the month.
"We need to increase competitiveness and the yardstick should be the member state that is leading the way," Ms Merkel told journalists immediately prior to the lunch. Suggestions that Germany should increase salaries, potentially harming the country's competitiveness, have irked Berlin in the past. The German leader indicated that non-eurozone states will also be invited to sign up to the competitiveness pact if they wish.
Mr Sarkozy hailed the initiative as a major step forward. "France and Germany are working hand in glove to defend the euro," he told the joint briefing. The Franco-German "structural plan" was a way of boosting European competitiveness and ensuring the convergence of member state economies, he added.
The plans for enhanced joint governance of the 17-nation eurozone economy appeared to hit a hurdle almost immediately however, with Belgian Prime Minister Yves Leterme blasting them as being overly constrictive. "There must be more economic cooperation, but member states must be left the room to carry out their own policies," Mr Leterme said on arriving at the one-day summit, originally scheduled to discuss energy issues. "Each member state has its own accents, its own traditions. We will not allow our social model to be undone," he added.
Critics also hit out at the pact's intergovernmental nature, with little role for the EU's institutions envisaged. "We welcome the move towards greater economic governance as step in the right direction. However, the method being proposed will not provide the required result as it is purely intergovernmental," said the leader of the European Parliament's Liberal group, Guy Verhofstadt. "The only effective way of ensuring the discipline and objectiveness that is required, is through the Community method and with the empowerment of the Commission to act and set real sanctions."

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EU leaders set deadlines for energy market

U leaders on Friday (4 February) agreed to set new deadlines for the completion of the bloc's internal energy market, linking up gas and electricity grids and consulting with the EU commission before doing bilateral energy deals with foreign suppliers. "The internal market should be completed by 2014 so as to allow gas and electricity to flow freely," the final conclusions read.
National governments are also invited to "accelerate work" on adopting technical standards for electric vehicle charging systems by mid-2011 and for smart grids and meters by the end of 2012.
The thorny issue of EU funding for cross-border energy infrastructure links, with net payers to the EU budget such as Germany keen on having just the private sector footing that bill, has been postponed until June, when the EU commission is due to come up with a list of projects which are "justified from a security of supply/solidarity perspective, but are unable to attract enough market-based finance."
In addition to pipelines and new foreign suppliers, "Europe's potential for sustainable extraction and use of conventional and unconventional (shale gas and oil shale) fossil fuel resources should be assessed."
Energy efficiency targets, "presently not on track", are also flagged up. The EU last year signed up to boost up its energy efficiency by 20 percent by 2020, for instance by streamlining standards for energy savings of buildings, transport and industrial processes. "As of 1 January 2012, all Member States should include energy efficiency standards taking account of the EU headline target in public procurement for relevant public buildings and services," the EU document reads.
On the external dimension of energy policy, EU member states are to inform the commission from 1 January 2012 "on all their new and existing bilateral energy agreements" with foreign countries. "The commission will make this information available to all other member states in an appropriate form, having regard to the need for protection of commercially sensitive information. The high representative is invited to take fully account of the energy security dimension in her work. Energy security should also be fully reflected in the EU's neighbourhood policy," EU leaders say.
Regarding Russia, accounting for up to 90 percent of the gas supplies in some eastern European member states, "work should be taken forward as early as possible to develop a reliable, transparent and rules based partnership with Russia in areas of common interest in the field of energy and as part of the negotiations on the post-Partnership and Co-operation Agreement process." EU climate change commissioner Connie Hedegaard welcomed the agreement and said it sends a very clear signal, that in spite of the economic crisis "there is a strong will to deliver on key tools to speed up Europe's transition into a resource-efficient, low-carbon society."

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