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Europe needs an 'economic government': EU president

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(BRUSSELS) - The European Union's new president, Herman Van Rompuy, is calling for an "economic government" for the bloc, with closer policy coordination and financial incentives for good performers.

"The crisis has revealed our weaknesses," the former Belgian prime minister says in a statement entitled "A European strategy for growth and jobs" prepared for an EU summit in Brussels on Thursday.

At present individual European nations "are responsible for the economic strategy of their government. They should do the same at EU level," Van Rompuy argues in his statement, obtained by AFP on Monday.

"Whether it is called coordination of policies or economic government," only the European nations working are "capable of delivering and sustaining a common European strategy for more growth and more jobs," he underlined.

The statement comes with Greece's deficit crisis as the backdrop. Spain, Portugal, Ireland and others are also in budgetary trouble.

"Recent developments in the euro area highlight the urgent need to strengthen our economic governance," Rompuy added.

The evocation of a European "economic government" will please France which has lobbied in this direction for years without success.

However Germany, Britain and others remain opposed to such a plan which they see as an assault on their fiscal independence.

Thursday's summit will also will also prepare the ground for a new EU economic strategy, focussing on investing in research, innovation and the green economy.

This will replace the bloc's Lisbon Strategy launched in 2000.

The ambitious Lisbon Strategy was supposed to make Europe's economy the most competitive and dynamic in the world. It failed to do so and Van Rompuy was happy to bury it.

The existing strategy "lacks focus", had an ineffective "one-size-fits-all approach" and is "without accountability or incentives", Van Rompuy bemoaned.

The remedy of Van Rompuy -- for whom the EU summit is his coming-out after keeping a low-profile since assuming the role in December -- would boil down the Lisbon Strategy's myriad aims to "a maximum of five quantitative targets".

These would be translated into individual national programmes as the 27 member states "have different starting positions", he said.

Van Rompuy prefers carrots to sticks and so eschews the idea of financial sanctions.

He does though call for "enhanced" surveillance of national programmes. Expert teams would audit member states and poor fiscal students called to account.

But the emphasis here is on "incentives".

These, the EU Council president suggests, could take the form of matching funds from the EU or privileged access to European Investment Bank loans.

For Van Rompuy it the matter is urgent and strikes at the very heart of the European project.

"The economic crisis has increased the sense of urgency to refocus our efforts and to better coordinate among ourselves," he said in a separate letter to European leaders.

"Our structural growth rate is not high enough to create jobs and sustain our social model," he warned.

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