EU's 'Dotcom' summit plays catch-up with US

Has Europe lost its race with America, as two of the world's economic powerhouses chase the prizes of the new, Web-driven economy?

Not if a summit of European leaders, ending today in Lisbon, Portugal, can do anything about it. The "old continent" may be lagging a decade behind in dotcom dynamism. But it has ambitious plans to catch up.

In launching those plans, leaders of the European Union's 15 member states are expected to pledge to tear down obstacles blocking new business, and to free up entrepreneurial energy.

"We want to transform Europe into the most dynamic and competitive knowledge-based economy in the world," said the summit's host, Portuguese Prime Minister Antonio Guterres, recently. Portugal currently holds the EU presidency.

While the dynamism has to come from businesspeople, their governments can help, says Laust Sondergaard. The founder of a Danish software company, Mondosoft, Mr. Sondergaard has just launched his search engine on the US market. "In America, you get better understanding from the public authorities as you try to grow your company," he says. "In Europe you always have to have one eye on the regulations."

But Europe's leaders are shying away from a helter-skelter rush to copy the United States. They want to rev up an entrepreneurial business culture to rival the US, but they want to keep Europe's cherished social safety net too. "We have a model of civilization we do not want to give up in any way," Mr. Guterres said at a press conference yesterday.

By striving for "competitiveness and cohesion together," argues European Commissioner for jobs Anna Diamantopoulou, "we can be a model for the world - matching the US on competitiveness but ahead of them with a fully modern European social model."

Whether Europe can embrace the digital revolution and still "shape this change swiftly according to its values and its concept of society," in the words of the European Commission's preparatory report for the summit, is far from clear. The goal, on a continent where roughly 10 percent of the work force is jobless, is full employment. Since the electronic economy is creating jobs fastest, that is where policymakers are looking to solve the problem.

"Information technologies can help reduce long-term structural unemployment by making the labor force more adaptable and training people for the new jobs that will become available," says the report.

Within 10 years, according to Ms. Diamantopoulou, half of all EU jobs will be in industries that either produce or use information technology. At the moment, Europeans are poorly placed to do those jobs: By 2002, it is estimated that there will be a 1.6 million shortfall in skilled workers and information technology firms will be crying out for labor.

Europe has been moving slowly in this field. Only 12 percent of European homes are hooked up to the Internet, compared with 45 percent in the US, and e-commerce revenues are growing much faster in America than in Europe. This year, EU e-commerce is expected to total $39 billion, less than one-third the US figure of $133 billion.

This week's Lisbon summit is expected to pledge lower Internet access fees - by encouraging more competition among telecom companies - to connect every school in Europe to the Internet by next year, and to make every school graduate digitally literate by 2003.

More broadly, the meeting is due to embrace a philosophy of economic reform to liberalize the marketplace, and to bring in the new legislation and new skills that new technologies demand.

The meeting's significance, observers say, lies partly in the way EU leaders will set themselves firm target dates for specific steps. Annual reviews will publicly rate each country according to its performance in a "naming and shaming" exercise.

Equally important will be the symbolic aspect. "It's the moment when everybody signs up to the new collective wisdom," says Peter Ludlow, director of the Brussels-based Centre for European Policy Studies.

With inflation and public spending deficits now under control across most of Europe, and with economic growth predicted at a healthy annual 3 percent for the next two years, the time is right, European policymakers say, to make the needed reforms.

On the technical level, Europeans are confident about the future. In the field of mobile telephony, which is widely seen as the Internet's future, Europe is ahead of the US, with firms such as Finland-based Nokia leading the way.

"When I sat down with American analysts two years ago, I realized that my firm was ahead of the rest of the world," recalls Sondergaard. "From the technical point of view, Europe is very well prepared to catch up. It's a question of approach."

(c) Copyright 2000. The Christian Science Publishing Society