EU leaders give go-ahead for common energy moves

BRUSSELS, Mar 24 (Reuters) European Union leaders gave the go-ahead today for a common energy policy to be drawn up but disputes over power markets liberalisation and cross-border mergers continued to reverberate around their summit.

On the opening day of the two-day summit yesterday, French President Jacques Chirac staged a brief walkout after a French business leader spoke in English, adding linguistic patriotism to the disputes over economic nationalism.

Leaders on the second day will try to put flesh to an accord in principle to coordinate national energy policies, for example by negotiating jointly with suppliers such as Russia or helping any member country suffering from supply cut-offs.

''Ten years from now if you look back, this was a very substantial debate leading to a...change in the substance of the energy policy in the European Union,'' said Austrian Chancellor Wolfgang Schuessel, whose country holds the bloc's presidency.

But others were more guarded, saying the public rows around the summit about government attempts to stymie cross-border mergers showed that progress could be slow.

''The problem with EU energy policy is that we don't know what to do, but we are not doing it,'' Swedish Prime Minister Goran Persson said with irony.

''Everyone is talking about liberalisation, but at same time the actors are very few,'' he told reporters.

Citing the dispute over energy prices between Ukraine and Russia this year that led to supply cuts across Europe, German Chancellor Angela Merkel warned others about Europe's increasing dependence on energy imports and the need to ensure security of supply, participants said.

The disputes over cross-border mergers and liberalisation in the energy sector overshadowed the official agenda.

''We cannot be open for business with the rest of the world and closed to each other,'' EU Commission President Jose Manuel Barroso said of moves by some members of the 25-nation bloc to protect their main energy companies from foreign predators.

ITALY-FRANCE DISPUTE

Italy has protested about what it regards as protectionist French intervention last month to merge energy companies Suez and Gaz de France. The move occurred days after Italy's Enel expressed interest in buying Suez.

Spain has changed a law to give its authorities the power to block a 29 billion euro (35 billion dollars) takeover bid by Germany's E.ON for Spanish utility Endesa.

Luxembourg Prime Minister Jean-Claude Juncker, trying to fight off a bid by Mittal Steel for Luxembourg-based steelmaker Arcelor, defended the French idea of ''economic patriotism''.

''It is not obscene that governments, above all if they are shareholders, ask questions about the industrial concept underlying a takeover or a merger, on the repercussions that it could have on a region or for workers,'' he told the French daily Liberation.

''Those who want Europe to appear like a market, and nothing but a market, should not complain later about the widening gulf with public opinion,'' Juncker said.

Chirac told the summit it was crucial EU nations coordinated energy policies but that free market principles alone could not shape the bloc's future power industry. ''We must do everything to encourage the development of 'European champions', based on solid industrial ambition and not on a purely financial approach,'' he said, according to notes released by his staff.

The European Commission is studying whether France breached EU law when, in the name of ''economic patriotism'', it brokered the Gaz de France-Suez merger.

Chirac briefly walked out of the summit when the head of the EU business lobby, Frenchman Ernest-Antoine Seilliere, switched from French to what he called ''the language of business'', English.

The French president led his ministers out of the room and his delegation hastened to tell the media in what some diplomats saw as an attempt to distract attention from violence in Paris during mass protests against a youth employment law.

Schuessel said the leaders' debate covered energy prices, the EU's growing dependency on energy imports and the need to boost ''green'' energy forms.

They agreed on the need to coordinate national regulators but not to create a new European super-authority, he said.

Schuessel, whose country rejects atomic power, said: ''It is quite clear there is a general consensus ... that each country has the right to choose her energy mix. Nobody can be forced to use nuclear power plants.''

REUTERS