EUROPE is set to establish its own annual Hollywood-style Oscar awards, writes Rory Watson, European Correspondent.

The competition is designed to promote the European film industry as it faces ever tougher competition from across the Atlantic and it could be in place by the year 2000.

The idea is being actively pushed by Italy, once one of Europe's most innovative film-making nations, and has now won the backing of all EU governments. Italy wants to make the European cinema prize into a world event, rivalling the Oscars.

''Such an instrument would be of great service in promoting European cinema as a whole and ensuring that it is even better known and acknowledged on the International scene,'' explained one EU diplomat.

The European Commission has now been asked by governments to work out the practical details of the awards.

''The question is do we do something totally new, or build on what already exists? It is clear that only European-made films would be eligible. It is also clear that we must involve the film industry in this. It will need to put up the prize money since there are no funds in the European Union's budget for this,'' said one official.

A useful precedent for the competition already exists with the relaunch last year of the European Film Awards in Berlin. But there is already growing resistance to the idea of linking the new competition with an existing film festival.

Italy has indicated that the importance of the award would be diluted if it were to be simply attached to existing events such as the Venice, Cannes, and Berlin festivals.

One of the greatest challenges facing EU officials will be to find a suitable name for the competition.

''We do not want to call them Oscars as that would simply mean copying the United States. We want our own identity. Already some have suggested naming them after a famous European director such as Ingmar Bergman. We are definitely looking for ideas,'' said one Brussels official.

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