EC leaders sow seeds for recovery: Copenhagen summit gives Jacques Delors six months to prepare plan for greater competitiveness, more jobs and increased prosperity

EUROPEAN COMMUNITY leaders yesterday sowed seeds for economic recovery, giving Jacques Delors, the European Commission President, six months to identify the causes of unemployment and suggest ways to prevent its recurrence at the present high levels.

A debate has now begun that will have enormous implications for the EC. It covers social policy, but also industry, education, trade policy and economics. Mr Delors made clear he saw it as nothing less than the relaunch of the Community out of a dark phase.

John Major said that he believed the Copenhagen summit had marked a decisive change in the EC. 'It is addressing today's needs and not tomorrow's dreams,' he said, wel coming the progress on enlargement, relations with Eastern Europe, and the economy.

'This summit has been a turning- point for morale,' said Francois Mitterrand, France's President.

The summit approved a plan from Mr Delors that will be turned into a legislative plan of action by December. It contains the promise of greater competitiveness, more jobs, and increased prosperity. 'We have sketched out, as Jacques Delors said, the first blueprint for how the European nations can move into the 21st century,' said Poul Nyrup Rasmussen, Denmark's Prime Minister. Member states will now make their own suggestions on the subject before 1 September.

The leaders avoided any damaging confrontations over economic and social policy or trade. The Community will not roll back its commitment to social protection in its attempt to become more competitive, EC leaders underlined.

A robust intervention on the dangers of EC social policy from Mr Major met with little support, and yesterday the Prime Minister toned down his position. 'Nobody is saying that there is no social dimension to the Community,' he said after the summit had ended. There was no clash over social policy, for the simple reason that the summit was not making any decisions on the issue, British officials said.

But Mr Major made it clear he will continue to fight for a reduction in the costs of employment. 'We have to look at the social requirements of people who are not in work,' he said. 'If we simply look at ever-increasing social provisions for those in work, we will do so at the expense of those out of work.'

Mr Delors said he saw six elements of competitiveness management: the organisation of production, the quality of labour, the cost and availability of capital, technical progress, and production costs. It is on the last that Britain concentrated, paticularly on bringing down labour costs. But Mr Delors said that 'if one of these (six) had been picked out, that would have been a very worrying signal to wage- earners'.

Mr Major was trying to gain allies for what will clearly be a long fight - before and after the plan is drawn up - to focus it on free-market solutions. At the moment it includes plans for new spending on high technology, life-long education, tax changes, public investment and environmental efforts.

The meeting produced little that will help the EC economy in the short term, beyond a new 3bn ecu ( pounds 2.4bn) lending facility to tack on to the economic package agreed at the Edinburgh summit, which was also extended. As part of this, the EC will offer interest rate subsidies to small business. The summit also agreed that member states could dip into EC structural funds ahead of time, by taking advantage of loans.

The EC is heading into recession fast, but, as Mr Rasmussen said: 'We are politicians, not central bankers.' This was a barbed dig at the German Bundesbank, which has been slow to reduce interest rates. Instead, EC leaders focused on the medium and long term.

Next year, the second phase of economic and monetary union begins, and they underlined that a lot of work remains to be done before the European Monetary Institute is set up as the forerunner for a central bank. No site for the EMI has yet been decided.

There are signs that Europe is also starting to look beyond its failure on Yugoslavia, with discussions on a new French idea for a pan-European security pact. It is aimed at filling the security vacuum in Eastern Europe. Discussions on a preparatory conference will also start in December. As soon as the Maastricht treaty is ratified, the EC's new common foreign and security policy will also come into force.

But the key test will be whether Mr Delor's plan materialises. The recommendations that he delivered were cunningly packaged, broad enough to give most member states some pleasure and some pain. 'It's either a very big thing, or a very big row,' said one official. 'Then again, it could just fizzle out.'

This sums up the feeling amongst many delegations: there are just too many uncertainties to judge what the result will be. However, all the member states agreed Mr Delors had found the right target with a focus

on employment and competitive

ness.

Mr Delors acknowledged that his paper, probably his last important initiative as Commission President, had a hard fight ahead of it. He is ill with sciatica and was obviously in pain. The Commission he heads has only another 18 months in power. But he said that he relished the fight. 'Until you reach the summit of Everest, you haven't won,' he said.

Leading article, page 21

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