PREVIEW: Egypt and euro to dominate EU energy summit

By Ben Nimmo Feb 3, 2011, 15:52 GMT

Brussels - The surge of anti-government demonstrations across the Arab world looks set to dominate Friday's European Union summit, diplomats say, with tensions over the euro also likely to surface.

The summit had originally been intended to debate energy issues and the EU's spasmodic attempts to improve its competitiveness. But the eruption of violence in Egypt, and a Franco-German push for even stricter rules for eurozone states, threaten to eclipse that agenda.

'We should be able to quickly endorse the draft conclusions' on energy, while a proposed statement on innovation appears 'uncontroversial', summit chairman Herman Van Rompuy wrote in his invitation to national leaders, giving a clear sign of the relative weight now attached to those two issues.

According to diplomats, the hottest item on the agenda is likely to be the EU's reaction to the wave of anti-government demonstrations in Tunisia, Egypt and Yemen.

The bloc has so far limited itself to calling for calm and a transition to democracy, but the outbreak of violence in Egypt, the fear of heightened tensions with Israel and the surge of oil prices driven by those fears, mean that the bloc is under pressure to come up with something more decisive.

'We will exchange views on the latest events in Egypt and Tunisia and their implications for the region itself and the EU,' Van Rompuy wrote Wednesday in the first official confirmation that the issue had forced itself onto the agenda.

Debate is also likely to rage over the best way to restore the euro's tarnished credibility in the light of its ongoing debt woes.

EU leaders have already agreed to come out with a heavyweight package of reforms, including setting up a permanent bailout system for eurozone states and reinforcing a current, three-year stopgap safety net, at their next summit at the end of March.

But as part of the package, France and Germany are expected on Friday to propose a 'competitiveness pact' for eurozone states, under which leaders would sign up to strict rules on issues such as retirement ages and, potentially, corporate tax levels.

Those are explosive ideas. France has already seen mass strikes against rises in the retirement age, while small euro states such as Estonia and Ireland, whose economies rely heavily on international investment, are expected to defend their low corporate tax rates tooth and nail.

No decisions are expected at the summit, but Van Rompuy has said that he wants to 'set out a clear path' towards the March meeting - leaving plenty of scope for leaders to clash on the issues now.