EU reform summit focuses on Asian economic crisis
EU reform summit focuses on Asian economic crisis
CARDIFF (Reuters): Asia's economic crisis weighed on the European Union summit yesterday, with British Prime Minister Tony Blair telling fellow leaders the world economy faced its greatest risks in almost two decades.
Blair, chairing the summit called to discuss political and economic reforms ahead of the 15-nation bloc's ambitious single currency and enlargement projects, warned that Europe could not shrug off Asia's financial woes.
"Our economies will not emerge from this turmoil without being affected by it and we have to decide how we intend to react," a British spokesman quoted Blair as telling the summit.
The Japanese yen slid to an eight-year low on the foreign exchange market, sinking to 146.55 against the dollar -- a drop of 1.4 percent from its level in late European trading last Friday.
The Asian turmoil has stoked fears that long bull runs on European and U.S. share markets could be dented amid fears of a fresh round of competitive currency devaluations in Asia.
French Prime Minister Lionel Jospin told the summit that the EU should rapidly assess the risks posed by Japan's economic crisis and consider how to respond.
It was vital for Europe to capitalize on the EU's current positive economic outlook to ensure lasting growth, he added.
The 1999 launch of the euro single currency in 11 of the 15 EU states would create a euro zone with a single monetary policy and this in turn would require greater coordination on economic policy, Jospin said.
In Brussels, European Trade Commissioner Sir Leon Brittan warned there could be far-reaching consequences if the yen continued to fall and dragged down China's currency, the yuan.
"The decline of the yen, if it continues, is clearly going to put pressure on China's currency. This could have far-reaching consequences for the region and the world economy," Brittan told a Brussels seminar.
Brittan said Europe and the United States would have to bear the main brunt of the Asian crisis, having to take in more cheap imports while seeing exports decline.
Britain, under fire for an insipid six-month stint as EU presidency, asked EU leaders to focus on how the bloc can be made to work for its 360 million citizens, many of whom see Brussels as a remote but powerful influence on their lives.
Blair said he wanted a political vision for the bloc "where we're moving Europe closer to the people rather than (having) some European federal superstate".
The aim of economic reform was to "move us away from heavy regulation towards help on jobs, for small businesses and completing the single European market to help trade and investment," he told reporters earlier.
The leaders also kicked off a debate to review the Union's decision-making processes, costly farm and regional funding programs and budgetary issues.
German Chancellor Helmut Kohl, trailing in opinion polls ahead of a September election that could end his 16 years in power, is seeking a cut in Bonn's EU payments.
Germany, burdened by the costs of reunification and millions out of work, insists it should not have to bankroll poorer southern partners who, in turn, will not give up their Brussels handouts to make room for even poorer states from Central and Eastern Europe.
Ten former Soviet bloc nations and Cyprus have been invited to start the accession process, prompting European Parliament President Jose Maria Gil-Robles to warn that enlargement could be delayed because of the need to overhaul EU institutions.