E.U. Leaders Call for Sanctions Against Reform Busters

By STEPHEN CASTLE

MADRID — Europe will be unable to afford its extensive social programs without economic change, the European Union's new permanent president, Herman Van Rompuy, warned Friday, supporting calls for sanctions against countries that fail to honor pledges to reform their economies.

At a news conference marking the start of Spain's presidency of the E.U., Mr. Van Rompuy shared the spotlight with the Spanish prime minister, José Luis Rodriguez Zapatero, and with the president of the European Commission, José Manuel Barroso. They went out of their way to resemble the "Three Amigos," but the crowded stage highlighted the difficulty the bloc is having streamlining its leadership.

The E.U.'s six-month rotating presidency was supposed to be scaled back by the recently enacted Lisbon Treaty, which created Mr. Van Rompuy's job. But on Thursday Mr. Zapatero set the political agenda by calling for a new European economic reform plan, which is about to be drawn up, to be made binding on national governments.

On Friday, all three leaders agreed on the need for a more strictly enforced reform program — an idea that would need the support of all 27 governments and that will probably be viewed with suspicion in Germany and Britain.

Those governments will be watching closely to see if the plan suggests a significant expansion of economic governance in the E.U., removing power from national governments.

On Friday none of the three E.U. leaders would give any detail on what would be proposed or what sanctions could be applied. But Mr. Van Rompuy made the clearest case for such a change.

The political mood, he said, had been transformed by the financial crisis and the global politics of the climate change conference in Copenhagen last month. "The balance of power has shifted," Mr. Van Rompuy said, "and Europe is more on the defensive now than it was a few years ago."

He said that with huge budget deficits and the prospect of growth of only around one percent as the bloc emerges from the financial crisis, Europe faces a big challenge. "We cannot on a solid basis pay for our social model, or what I call our European way of life," Mr. Van Rompuy argued, adding: "We now have a window of opportunity for a strategy."

Next month E.U. leaders will meet to discuss plans for the new "2020" program to increase research and development, address labor market failings, and focus on areas such as the digital economy, energy and green growth. The idea is to get final agreement by the end of June. The E.U.'s last such project, the Lisbon agenda, was supposed to make the bloc the world's most competitive economy by 2010, something it manifestly failed to do.

On Thursday Mr. Zapatero called for greater economic union, suggesting that the European Commission should gain more of the kind of powers it enjoys to enforce anti-trust decisions, and ensure a level playing field in the bloc's single market.

Mr. Van Rompuy described the idea as "very ambitious" but said that many E.U. nations feel a greater "sense of urgency" than a few years ago.

Mr. Barroso pointed out that proposals to increase pressure on E.U. nations to carry through reforms were rejected five years ago, but that the climate had changed since the onset of the financial crisis.

At the Madrid news conference, the three men largely managed to avoid contradicting each other, though their appearance showed that changes designed to streamline the EU have — in the short term — simply produced an extra president.

Mr. Van Rompuy's job was designed to provide continuity and to take over the leadership job occupied by the prime minister of the country that holds the six-month rotating presidency of the EU.

Defending the new arrangement, Mr. Van Rompuy said that "in a democracy it is not one man or woman who decides."

At one point he and Mr. Barroso both deferred to the other as neither appeared eager to answer one questioner ahead of the other. Then came the only minor disagreement of the afternoon, in response to a question about whose phone should ring in a crisis. Mr. Van Rompuy said the world was "more complicated than that." Mr. Zapatero said it would be "advisable for the phone to ring in the office of the permanent president of the council" — Mr. Van Rompuy.