Turning Off The Lights.(electric power in Europe)

When Tony Blair turns on his lights in Downing Street, the power comes from Electricite de France. Reason: when Britain opened its energy market to competition in 1990, the French company leapt in. But fat chance for a British company to light up the Elysee palace, where French President Jacques Chirac lives. For despite vociferous complaints and its own promises, France stubbornly clings to its state- owned monopoly, protecting 120,000 jobs and closing out foreign rivals- -in defiance of its partners in the European Union.

Never has so much history hinged on a simple, boring power company. In the epic battle over the course of Europe's future, EdF has become an improbable litmus test. Will the Continent go along in its time-honored way, protecting government monopolies, favored industries and cozy social-welfare systems? Or will it embrace the free-market reforms economists say are necessary to get growing again--and realize the grand ambition of creating a genuine single market of 380 million consumers, a United States of Europe? Forget lofty debates over whether Europe should be more or less "federalist," or whether it should speak with one voice or many in foreign affairs. At issue here is the hard fact that Europe lags far, far behind America in just about every measure of economic success: growth, job creation, technology. Indeed, the United States' lead in per capita GDP--a fundamental measure of prosperity--is back to where it was in the early 1960s, when Europe was still rebuilding from the war.

So it was, last week, that the worthies of the Union gathered in Barcelona. It would have been easy to mistake it for just another economic summit, a diplomatic gabfest where leaders pose for the camera and issue bland communiques. But behind the scenes, Barcelona was a snake pit of finger-pointing and tough words, with presidents and prime ministers accusing one another of blocking progress and shortchanging Europe's future. And what did it mostly come down to? Yes, electricity.

On one side was the old guard, led by France. With French unions putting thousands of protesters in the streets last week and elections just around the corner, Chirac and Prime Minister Lionel Jospin were in no mood to change the way the country runs its public services, and that includes EdF. Euro- reformers who seek to create a more market- oriented economy (with all that implies in the way of labor mobility, hiring and firing and corporate streamlining a l'Americaine) managed to wring out only the most marginal concessions necessary to keep the summit together. At the weekend, a face-saving compromise took shape: France would open its power market to competition only for commercial customers. Households, which make up 80 percent of the monopoly's market, would be stuck with what they've got.

Who cares, beyond French consumers? British Prime Minister Tony Blair, for one--and so should most Europeans, if they have the good sense to pay attention. Before the summit began, Blair called it "make or break." For a lot rides on Barcelona, beyond eye-glazing "economic reform." At a similar summit in Lisbon two years ago, Europe's leaders committed themselves to an ambitious program to raise GDP by 40 percent, create 20 million new jobs and make Europe "the world's most dynamic and competitive economy" by 2010. Economic liberals, led by Britain, Spain and the Scandinavian countries, had the recipe: free up markets, modernize labor laws and hike investment in education and technology. Trouble is, they've been blocked almost completely by ...