A plan to silence the squelchers

THE HEADS of government who meet towards the end of the week in Brussels for the first summit of the new European Union have a choice.

They can, if they want, have a narrow, dreary little summit which focuses introspectively on how the internal workings of the EU's institutions need to be adapted when the negotiations to admit Sweden, Norway, Finland and Austria are completed next year.

It is not that such issues are unimportant. But a summit which allowed itself to become bogged down in wrangling about institutional issues would be further evidence that Europe's leaders have collectively lost the plot. Unless the post- Maastricht European Union can show Europe's people, from Bilbao to Berlin, that it is concerned with real-life issues, it will go the way of the Holy Roman Empire into practical and historical irrelevance.

The far better alternative is to stick to their original guns and make this a summit about boosting employment and tackling the crisis of declining European competitiveness. The twin pillars of this summit should be the White Paper on jobs which the President of the Commission, Jacques Delors, has been working on, and a final settlement of the outstanding Gatt issues between Europe and the United States.

The reasons why this superior summit is reportedly now in jeopardy are mostly due to wilful misunderstanding over the Delors White Paper and overdone political pessimism over Gatt. Sticking my neck out, I think it is now almost inconceivable that the 15 December deadline will pass without a Gatt deal. Folly on a spectacular scale can never be ruled out, but over the last few days, Micky Kantor and Leon Brittan, the US and EU negotiators, have succeeded in bridging their differences.

I was in Brussels at the end of last week and the sense that a deal was at last in the bag was overwhelming. All that is happening now is that the French, having already extracted some worthwhile (ie, damaging) concessions, are now indulging in some rather gruesome grandstanding for domestic consumption. The result is that nobody is currently prepared to make Gatt the centrepiece of the summit, just in case. If the French have dropped their remaining objections by Friday and Mr Brittan is allowed to make progress in Geneva, no great harm will have been done. If not, the summiteers should set themselves the goal of making it happen. For the heads of government to leave Brussels with Europe still blocking a successful Gatt outcome is unthinkable.

But how much better it would be if a resolution of Gatt could be made the starting point, the essential context for discussion of Mr Delors' White Paper.

This document has so far received a pretty bad press, especially in Britain, where it is still politically convenient to blow raspberries and make loud squelching noises whenever the Commission President's name is mentioned. Mr Delors, it must be said, has also been his own worst enemy. The collating and editing of the White Paper has been a notable shambles without any apparent critical path leading up to the summit. This has enabled sceptics to say that there is not time to read and digest its 180 or so pages. A further error was to send an ill-formulated draft to finance ministers (Ecofin, in the prevailing jargon) two and half weeks ago.

In as much as any theme could be defined from its pages, it appeared to prescribe shorter working hours and job sharing as the way to deal with Europe's chronic inability to create enough jobs for its citizens.

Apart from its whole- hearted subscription to the 'lump of labour fallacy' (the mistaken belief that there is a given amount of employment which rising productivity inexorably and permanently reduces), there was the usual Delorean panegyric to high technology (government-funded) as the means of restoring Europe's competitiveness.

Not surprisingly, this wretched document, apparently penned more or less unsupervised by Mr Delors' chef de cabinet, was shot down in flames. It was left to Kenneth Clarke to tell the British press what a load of rubbish it all was and how poor old Mr Delors really would have to try a bit harder if he was going to make any impression on chaps who actually had to run things.

What all this obscures is that the final version of the Delors White Paper has quite a lot to commend it. Of course, it advocates things which the British Government will react against instinctively, such as spending more than 100bn ecu( pounds 76bn) over the next five years, partly funded by 'Brussels bonds', on what the Commission calls 'trans-European networks' - the TGV to Moscow, according to one detractor. But the White Paper is, none the less, an intellectually serious attempt to analyse the causes of Europe's economic malaise and to offer some prescriptions which even Mr Clarke, if he bothers to read them, will find sensible.

Although Mr Delors does not buy the case for total de-regulation of the European labour market, the White Paper explicitly recognises that relative labour costs, in particular non-wage costs borne by employers, are a key factor in eroding the competitiveness of European business. There is a particularly interesting chart which shows how high social costs affect employability, particularly of lower paid workers. In other words, there is acknowledgement of the extent to which the laudable end of social protection has become a European unemployment doomsday machine resulting in more than 18 million people - 12 per cent of the labour force - expected to be out of work by next year.

This is not to say Mr Delors has become a Thatcherite. He puts at least as much stress on active labour market policies as on pricing people back into work. But the tone of his White Paper, indeed that of most people you meet in Brussels these days, is very different from a couple of years ago, when there was an arrogant assumption that there existed a European economic model better than anything to be found in the United States or South-east Asia

Crucially, there is no longer any appetite for trying to preserve a vision of social Europe by putting up the barriers of trade protection. The Delors White Paper is premised on a successful outcome to Gatt.

Delors does not offer a blueprint for a European economic revival, but it is a straw in the wind that the European Union is at last facing up to the issues which really matter for its citizens. Perhaps the theme of the summit should be 'Europe gets real'. That is something which Mr Major and Mr Clarke should warmly welcome.