Europe's priorities ahead

The European Parliament recently approved the European Commission for its next five-year term - after a three-month delay - and the 27-member body has now taken office.

The Commission, together with the EU member states, the European Parliament, as well as with the European Council's new permanent president, Herman Van Rompuy, can now look ahead and focus on Europe's priorities.

José Manuel Barroso has made it clear that the economy is to be the Commission's top priority. "Over the next five years, I hope that this Commission will play a key role in bringing Europe out of the crisis with a competitive economy which provides our citizens with sustainable growth and prosperity," he said.

A whole new set of challenges await the EU and the scenario in Europe is somewhat different to the one present five years ago when Barroso first took office. Thankfully, institutional reform is no longer set to dominate the European agenda, now that the Lisbon Treaty has finally entered into force.

The EU's main test, of course, is to restore economic recovery in the aftermath of the biggest recession in decades, caused by a global financial crisis, and to get people back to work. Financial reform, climate change, enlargement - especially Turkey's EU bid, and an overhaul of the EU's €130 billion budget, in particular funds for agriculture, are also important priorities.

Much work will have to be done on a new "2020 strategy" - to create jobs and revive Europe's economy - to replace the Lisbon Strategy, agreed by EU leaders in 2000, which aimed at making the EU by 2010 "the most dynamic and competitive, knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion".

In a nutshell, the Lisbon Strategy failed, for a variety of reasons, especially with regard to economic growth and job creation.

A European summit held 10 days ago, presided over by Van Rompuy, discussed the 2020 strategy and the Commission is to formally present its proposals next month at another summit. It will be interesting to see exactly what is proposed next month, how much the global financial crisis has influenced Brussels' economic outlook and what type of market reforms will be proposed.

The Commission will surely take note of Mr Van Rompuy's favourite argument since taking office, namely that EU growth must double in order to maintain what he calls the "European way of life" - a reference to Europe's generous social welfare system.

The EU will have to carefully monitor the difficult economic situation in Greece, with its extremely high budget deficit and public debt, which is threatening the stability of the eurozone. The European Commission has placed Greece under budgetary surveillance and EU leaders recently pledged their support and solidarity for the country, but gave no specific details on how, if at all, it intends to help Athens.

Sooner or later, however, something will have to be done to support Greece even though the Lisbon Treaty forbids one state coming to the fiscal aid of another if the latter is unable or incapable of meeting the fiscal laws set down within the treaty. However, Article 122 of the treaty allows other European states to come to the fiscal aid of another state if the latter is suffering fiscal difficulties caused by "exceptional circumstances beyond its control". The legal experts will have to decide whether Greece fits into this category.

The EU will also have to closely monitor the economic situation in Spain, Ireland and Portugal, which are also suffering from high deficits. Prof. Nouriel Roubini of the Stern School of Business at New York University remarked recently at Davos: "If Greece goes under, that's a problem for the eurozone. If Spain goes under, it's a disaster." So while the situation in Spain is nowhere as bad as that in Greece, the potential for a major crisis is there.

On the global scene, the EU has a major challenge to raise its international profile. Its choice of Van Rompuy and Catherine Ashton, the High Representative for Foreign and Security Affairs, has hardly done that, and most countries still have no idea who really speaks for the EU on the world stage. Is it Barroso, Spanish Prime Minister Jose Louis Zapatero, as the current holder of the EU presidency, Van Rompuy or Ashton?

Lady Ashton has got off to a mixed start and had adopted a low-profile approach in her new job. She was recently criticised by MEPs for her response to the Haiti crisis. Guy Verhofstadt, the head of the Liberal bloc, said recently: "We expect more from a high representative than we have seen up to now."

Furthermore, the EU is still coming to terms with the so-called 'Obama snub' in which the US President decided not to attend an EU-US summit planned for May in Madrid, which has now been cancelled. This latest development should perhaps encourage the EU to set a clear agenda when it plans such summits.

Obama obviously felt there were other priorities than simply spending a few hours talking to Barroso, Van Rompuy, Ashton and Zapatero about 'common values'.