Europe looks to Obama over stimulus

Reuters
Published: December 12, 2008

By Marcin Grajewski and Pete Harrison
EU leaders sealed an ambitious global warming deal and 200-billion-euro (179 billion pound) economic crisis pact on Friday, urging U.S. President-elect Barack Obama to join Europe in a "trans-atlantic recovery plan."
French President Nicolas Sarkozy hailed commitments to cut greenhouse gas emissions by 20 percent from 1990 levels by 2020 as the most radical in the world, despite concessions to industry which dismayed ecology groups. Economic crisis sweeping the world should not undermine climate policy.
"Our message to our global partners is: 'Yes, you can ... especially to our American partners," EU Commission President Jose Manuel Barroso told a news conference at the end of a two-day Brussels summit.
In a direct call to Obama before global talks next year on a successor to the Kyoto climate change pact, he added: "We are asking him to join Europe and with us to lead the world...Let us now build a trans-atlantic recovery plan and trans-atlantic climate and energy partnership."

EU leaders see in Obama a commitment to climate policy that incumbent George W. Bush lacked for most of his presidency.
Ecology groups were scathing about the EU plan, saying it had been marred by concessions to Poland to ease the shock on its heavily polluting Soviet-era coal-fired power stations, and to industry in economic powerhouse Germany.
"This is a flagship EU policy with no captain, a mutinous crew and several gaping holes in it," Sanjeev Kumar of environment pressure group WWF said as the news of the concessions emerged from the talks.
To help eastern European nations with the cost of adapting their coal-fired power sectors, they will receive extra funding from revenues from the EU's flagship emissions trading scheme, which makes industry buy permits to pollute.
Polish Prime Minister Donald Tusk greeted cameras with a Victory "V" sign as he left the summit.
"BAD GUY"
The extra cash will mean less financial support for green projects, although a British-backed technology to capture and bury emissions from power stations underground did see its future funding rise under the pact.
Measures were agreed to reduce the risk that carbon curbs would hurt European industry and reduce its ability to compete with less regulated rivals overseas. The biggest threats are seen for steel, aluminium, cement and chemicals.
Italy fought to protect its glass, ceramics, paper and cast iron industries, but eventually dropped a threat to block the deal. "I can't use any veto ... because I can't cast myself in the bad-guy role," Prime Minister Silvio Berlusconi said.
The economic stimulus package, amounting to 1.5 percent of the bloc's gross domestic product, was announced on a day that brought bad news elsewhere for the global economy.
The U.S. Senate rejected a U.S. auto sector aid programme, sending a chill through world markets. Trade sources said the World Trade Organisation had decided there was not enough consensus among major economies to call ministerial talks on a global trade deal before the end of this year.
The EU stimulus pact, which pledges temporary support for sectors such as the auto and construction industry, draws largely on existing national packages and has been greeted with much scepticism by economists.
Sharp differences emerged on the first day between Britain and Germany on Berlin's refusal to pump the economy with cuts to value added tax (VAT), a core component of Prime Minister Gordon Brown's stimulus plan.
But the row was defused on the second day as Chancellor Angela Merkel signalled Germany could take more steps next year, and leaders decided to defer a noisy row with France over VAT cuts on labour-intensive services till next March.
"We need the pact," said Sarkozy. "In an exceptional situation, you need exceptional measures in a crisis."
"BRAVE BRIAN"
EU leaders also took a step towards salvaging the Lisbon Treaty of EU institutional reforms rejected by Irish voters in June by giving Dublin assurances it will not affect key policy areas such as abortion and its cherished military neutrality.
The move prompted Irish Prime Minister Brian Cowen -- dubbed "brave" by Sarkozy -- to declare he would hold a potentially risky second plebiscite on the plan by end-October next year, which if successful could usher in the treaty by January 2010.
"On the basis of today's agreement ... I am prepared to go back to the Irish people next year," Irish Prime Minister Brian Cowen said of a potentially risky re-vote. "I am confident we will be successful."
The Irish rejection stalled a treaty hailed by supporters as streamlining the EU's unwieldy decision-making processes. The successor to the defunct EU constitution, it needs the assent of all 27 EU states before it can be implemented.
Aside from Ireland, the Czech Republic and Poland are the only two EU states yet to ratify the treaty. Prague is on its way to doing so early next year, and Polish President Lech Kaczynski said he would sign it off when the Irish said "Yes."
(Additional reporting by Paolo Biondi; Kerstin Gehmlich, Frank Prenesti, Francois Murphy, and Brussels bureau; writing by Mark John; editing by Ralph Boulton)