EU leaders seek to overcome French resistance to energy reform, pledge support for new Yugoslav deal

Friday, March 15th 2002, 12:00 am

By: News On 6

BARCELONA, Spain (AP) _ European Union leaders opened a two-day summit Friday debating ways to invigorate their economies. They also were to take up Middle East peace efforts and action against Zimbabwe.

With security heavy in this port city, police wielding truncheons clashed with stone-throwing protesters during a demonstration by anti-globalization activists.

Tens of thousands of demonstrators have swarmed into Barcelona from around Europe and Spain to protest European leaders' plans to liberalize energy and financial markets.

As protesters marched through Barcelona's central market district, a group of hooded demonstrators strode toward a police line, police charged, beating protesters and grabbing some as demonstrators hurled stones.

No major injuries were reported. Police said some arrests were made, but did not specify how many.

The leaders gathered here were keen to play up the Balkans as a rare bright spot for EU diplomatic efforts. They offered immediate backing for an agreement reached Thursday by Serbia and Montenegro to stick together in a new loose federation instead of breaking up the last remnant of the old Yugoslavia.

``This is a fantastic piece of news,'' said Spanish Foreign Minister Josep Pique. ``This is the only way to guarantee the future of Serbia and Montenegro, and the whole region.''

Pique pledged the EU would ``throw all its weight'' behind the new federation. The agreement came on the heels of a power sharing government accord in Kosovo and major steps to boost Macedonia's peace deal.

Ministers from 28 nations _ 15 EU members and 13 applicant nations _ were expected to issue a strong condemnation of Israel's military incursions into Palestinian territory.

``We will make a very clear statement ... there is no military solution,'' Pique told reporters.

The EU is seeking international backing for Saudi peace proposals offering Arab recognition for Israel in return for its withdrawal from Arab land.

British Prime Minister Tony Blair, meanwhile, sounded out the views of other leaders on the possibility of action against Iraqi leader Saddam Hussein.

British officials said other European Union leaders recognized the threat posed by Iraq's development of weapons of mass destruction. The British said, however, there was no decision on specific measures to be taken against Saddam.

The EU nations are also considering intensifying sanctions against Zimbabwe after elections they say were deeply flawed and brought a victory for President Robert Mugabe.

Friday's violence came recalled past clashes between police and anti-globalization activists at international gatherings, which had waned in the aftermath of the Sept. 11 terrorist attacks.

More than 8,500 police and anti-riot personnel patrolled the city against possible terrorist threats and protests. Fighter jets, anti-aircraft missiles and warships were on standby and NATO deployed an AWACS radar plane to monitor air traffic over northern Spain.

On the economic front, the leaders began assessing efforts launched two years ago to modernize the economies of the bloc by slashing red tape, lifting national barriers and speeding the pace of digitalization.

But little progress was expected because the EU's two largest nations _ France and Germany _ face elections this year and both governments fear upsetting powerful labor unions.

Amid French opposition to greater utilities liberalization, leaders were studying compromise measures to open gas and electricity markets across Europe to competition.

Leaders of 13 nations seeking EU membership joined the EU's economic talks. With 10 of the candidates hoping to join the EU in 2004, the Union was eager to include the them in talks on modernizing the European economy.