Luxembourg heads EU stage

As one of the smallest states in the European Union, Luxembourg will head the 25-nation bloc during the first half of 2005.

Luxembourg's administration built to govern around 460,000 people - where the prime minister Jean-Claude Juncker is also the finance minister - will over the next six months give political direction to an EU of over 450 million people.

Luxembourg has some big tasks ahead of it.

Its turn at the EU's helm is set to be dominated by money matters as it tries to make some headway in the discussion on future funding of the EU between 2007 and 2013.

Money matters

June has been set as a date for political agreement on the budget ceiling but the discussions are set to spill over into the UK Presidency as governments wrangle among one another about how much capitals should be paying into EU coffers.

Mr Juncker will also need all his political skills to try and forge an agreement on reform of the rules governing the euro - the stability pact - which were left in disarray after a disagreement at the end of 2003 pitting the European Commission against Germany and France.

Member states will also re-visit the flagging Lisbon agenda - the EU's aim of turning itself into the most dynamic economy in the world by 2010 - under the Luxembourg presidency.

There will be a 'mid-term review' of this economic goal which has been marred by member states' reluctance both to spend more on research and development as well as implement basic internal market rules.

Bush visit

Another big event for Mr Juncker's government will be smoothing the path to a visit by US President George W. Bush to Brussels in February.

Luxembourg has also inherited the political consequences following the bloc's decision last month to open membership talks in October with Turkey. In addition, it will preside over the opening of talks with Croatia on 17 March and the finalising of membership treaties in April for Bulgaria and Romania.

The other big issue coming up is referenda on the European Constitution with several member states planning to hold polls. Spain is to be the first up on 20 February.

Among the most immediate tasks for Luxembourg, however, will be co-ordinating the EU's relief aid to Tsunami-struck south east Asia.

EU development ministers will meet on 7 January to assess the situation - the European Commission has so far pledged 30 million euro to the devastated regions but has said that much more is available.

Advantage

Luxembourg is starting its terms with the advantage of following a low-key Dutch presidency.

The Hague was hampered during its six month stint by the fact that the EU found itself in a state of flux broken up by the summer recess, the European Parliament slowly getting back on its feet after elections and the high-profile dispute over the new European Commission team - only resolved at the end of November.