Pre-summit deal aims to solve euro management dilemma

As EU leaders arrived here for today's summit the Luxembourg Presidency last night was still desperately trying to stitch up a deal to reconcile France and Britain over the political management of the single currency.

A new compromise text was being circulated which provides for partial access of non-euro states to a key committee of the participating countries, the EuroX. But German and French sources were still adamant that there were issues on which only members could participate.

"The UK, which invented clubs, should not complain about being excluded," the French Prime Minister, Mr Lionel Jospin, said this week.

The issue is supposed to be resolved this morning to allow leaders to spend the bulk of their time discussing the enlargement process, particularly the vexed question of how many to open accession talks with next year, and attempts to improve relations with Turkey.

Yesterday, the German Foreign Minister, Mr Klaus Kinkel, stressed the need for the process to be as inclusive as possible of all the 10 central and eastern European countries and Cyprus.

"All 11 candidates must be given clear prospects for entry," Mr Kinkel told parliament in a government declaration ahead of the summit.

Turkey is another matter. Things were not looking good for Ankara following a dinner last night between Luxembourg's Prime Minister, Mr Jean-Claude Juncker, and the Turkish Prime Minister, Mr Mesut Yilmaz, at which Mr Yilmaz appeared unwilling to give any of the guarantees sought by the EU.

During the talks, Mr Juncker reiterated that Turkey should recognise the jurisdiction of the International Court of Justice in The Hague on territorial disputes with Greece. Yesterday Mr Juncker did not pull his punches. "There is no comparison possible between Turkey and the other 11 applicant countries," he told the BBC. "Noone is tortured in those countries."

A dinner between the EU leaders and the Turkish Prime Minister scheduled for tomorrow night has been cancelled. Publicly diplomats said it had been by mutual consent and that the time was not right. Privately they were saying that the Turks had too high expectations of the summit, hoping that a clear declaration of their candidate member status would be possible.

A declaration tomorrow on Turkish participation in a pre-accession European Conference is therefore likely to be severely hedged with preconditions, making Greek support considerably easier.

Meanwhile, The Irish Times has learnt that the presidency's EuroX compromise, around which discussions will focus this morning, involves the establishment of an informal sub-committee of the euro states, probably 11, to deal with the euro issues which exclusively concern them. All decisions, however, would ultimately be taken at formal meeting of the Council of Foreign Ministers.

The Euro-X committee's agendas will be circulated to the "out" countries, and the latter will then be able to indicate those issues on which they believe they also have an interest in participating. The 11 will then discuss admitting them for those parts of the agenda.

The Commissioner for Economic Affairs, Mr Yves Thibault de Silguy, pressed last night by journalists to enumerate what he believed were matters of exclusive interest to euro states, confined himself to listing issues on which the treaty already excludes voting participation by the "outs" - exchange rate issues between the euro and non-euro currencies, the penalty provisions of the Stability Pact between euro states, and technical issues like the shape of coins.

The hope is that such a restrictive definition of the committee's remit will reassure the British, allowing them to claim that they have blocked French proposals for a major political counterweight to the European Central Bank. Mr Blair, will still be able to claim he is at the heart of Europe's leadership.