BRUSSELS - Business Secretary Peter Mandelson will call Friday for strong leadership of the European Union and outline his vision for revamping its economic policies.

Although Mandelson will not name Tony Blair in the speech, his comments could be seen as an attempt to revive the former prime minister's chances of becoming the EU's first long-term president.

Media say Prime Minister Gordon Brown has continued to promote Blair as a candidate, even though French President Nicolas Sarkozy has signalled that he and German Chancellor Angela Merkel will not back him.

The point I will keep coming back to today is that we have a problem of leadership in Europe and political willingness to drive change, Mandelson will say, according to a text of the speech distributed to reporters in Brussels.

In the speech, to be delivered in the Belgian capital, he will call for a new European leadership and a whole new magnitude of political cooperation.

Mandelson, a former EU trade commissioner, will also call for more innovation in business, a realignment of budget priorities and a low carbon, high growth, high employment, banking-crisis-free future.

He will also warn that EU plans to tighten regulation of hedge funds and private equity managers could choke off investments and deepen the global credit crunch.

MEMBER STATES SEEK CONSENSUS-BUILDER

Blair's chances of becoming president of the Council of EU leaders have been hampered by other member states' concerns that he backed the U.S-led war in Iraq and by their desire for a leader who can build consensus.
Although Blair's chances have faded, Mandelson made clear to Brussels-based reporters in a video link-up from London on Thursday that the former prime minister was capable of securing compromises and building consensus.

He brokered very radical change and reform in the Labour Party and built a consensus, and that was not easy. I saw him do the same in Northern Ireland, he said of peace efforts under Blair.

The post of president for a renewable term of 2-1/2 years is being created under the Lisbon treaty, which will reform EU institutions and decision-making to try to increase the 27-country bloc's standing on the world stage.

Belgian Prime Minister Herman Van Rompuy and Dutch Prime Minister Jan Peter Balkenende are also among the possible candidates.

Foreign Secretary David Miliband is widely seen as the front-runner for the post of foreign policy high representative, a post that will have greater powers under the treaty which goes into force on December 1.

Other possible candidates for the foreign policy chief job include EU Enlargement Commissioner Olli Rehn and former Austrian Foreign Minister Ursula Plassnik.

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