EU leaders announce agreement to partially open up energy markets

Sunday, March 17th 2002, 12:00 am

By: News On 6

BARCELONA, Spain (AP) _ Eager to get economic reforms back on track, European Union leaders signed off on a slew of pledges Saturday to cut red tape and boost Europe's floundering economies.

The leaders, however, announced a deal that would only partially open energy markets to competition, one of the more contentious areas of reform at the two-day EU summit that ended Saturday.

The opening up of national markets, boosting investment in education and research and development and promoting high technology are all part of the EU drive to become the world's most ``dynamic economy'' by 2010.

Admitting that they failed to meet targets set two years ago, EU leaders say they are adamant in pushing through reforms in an attempt to catch up to the United states and boost job creation.

The summit was followed by a march and rally by tens of thousands of protesters who banged drums, blew whistles and carried banners with slogans such as ``Terror USA'' and ``Against A Capitalist Europe.''

The rally was peaceful, but about 200 violent protesters rioted after it ended, smashing windows and throwing rocks and gasoline bombs at police who fired rubber bullets and used truncheons to subdue them.

Spanish Prime Minister Jose Aznar, the summit host, called the agreements reached during the meeting a ``fundamental step'' to freeing Europe from the last vestiges of state monopolies.

``There is a new economic direction taking shape,'' British Prime Minister Tony Blair told reporters. Dutch Prime Minister Wim Kok said by recommitting to strict economic targets ``we have a new impulse,'' he said.

Faced with French resistance, the leaders agreed to open the gas and electricity markets to competition by 2004 at the latest, but only for commercial customers. Aznar said this amounted to as much as 70 percent of the market.

A date to open the gas and electricity markets for private users will be decided in the next 12 months, the leaders agreed.

Energy liberalization has become a hot topic in France, where Prime Minister Lionel Jospin and President Jacques Chirac face each other in presidential elections just weeks away. Both candidates are wary about the French public's concerns over energy prices.

Chirac and Jospin said they received ``solid guarantees'' at the summit that traditional public services will remain off-limits to free enterprise.

Still, Spanish Finance Minister Rodrigo Rato said the partial liberalization was progress. ``A year ago there was no possibility of agreement at all,'' he said.

The EU leaders agreed to boost their research and development spending to reach 3 percent of gross domestic product by 2010, with two-thirds of investment coming from the private sector. They also aim to increase daycare for at least 90 percent of children of working mothers and raise the average retirement age from 58 to 65 years by 2010.

The leaders also pledged to raise vocational training and education standards, boost Internet usage by young Europeans and cut taxes for low income earners.

In their statement, the leaders also touched on the Mideast situation, hailing a peace initiative by Saudi Crown Prince Abdullah. They demanded that Israel lift all travel restrictions on Yasser Arafat and that the Palestinian leader rein in terrorism.

The Europeans said they also plan to widen sanctions against Zimbabwe for staging flawed elections, won by President Robert Mugabe. A final decision was expected next month.

On Friday, police used truncheons to beat back rock-throwing protesters Friday and clashed again Saturday night with protesters who turned violent. Police said at least 38 people were arrested and seven officers injured Saturday night, while 29 people were arrested Friday and early Saturday.

At Barcelona's Camp Nou stadium, a soccer match between Spain's most popular teams was halted for seven minutes Saturday when two protesters with anti-capitalist, anti-European slogans on their T-shirts ran onto the field handcuffed themselves to the goalposts.