Leaders fail to agree formula on future defence role of EU

DIPLOMATS were working frantically overnight on the four or five key compromise texts of treaty changes that remain outstanding at the Inter Governmental Conference. But the complexity of issues still outstanding suggests the meeting may yet go through tonight before this two year, agonisingly cumbersome process of treaty reform comes to an end.

In their last discussion of the evening before dinner leaders failed to agree a formula on the future defence role of the Union, particularly the incorporation of the Western European Union into the EU.

But Irish and neutral opposition was strongly supported by the new British Prime Minister, Mr Tony Blair, who warned the summit that "what matters is what works, and what works for us is NATO". He could not accept any wording which undermined the centrality of NATO to Europe's defence or alienated its non EU allies.

But the Taoiseach, Mr Bruton, expressed confidence that key discussions on employment, the environment and social policy had produced broad agreement.

The leaders had not tackled the vexed issue of institutional reform until dinner last night.

Intensive bilateral contacts continued throughout the day between the Dutch presidency and Irish, British and Danish diplomats in a bid to reconcile Britain's determination to preserve a total veto on control of its borders with the aspiration of 13 states to move such issues under the aegis of the Union's institutions and majority voting.

Irish diplomats were insisting that if they had to opt out of some provisions because of the common travel area with Britain they also wanted to be able to opt in easily to issues like enhanced police cooperation.

In the end the deal is likely to provide both an initial opt out for both countries and an easy opt in with a written guarantee to the British which safeguards their position. Last night, however, they were still trying to restrict further the new role for the European Court and backing German demands to preserve unanimity voting on such issues. Diplomatic sources suggest the formula will be acceptable to Ireland.

Divisions over unanimity are also central to the argument about final formula on new provisions for flexible integration - a method of allowing groups of willing member states to proceed with their own projects using Union institutions. Britain is still insisting that such projects must receive unanimous support.

The heads of government started their discussion of the IGC with the section of the treaty entitled "The Union and the Citizen" which ranges from employment to social policy, the environment and public health. Broad agreement with the presidency final draft text was expressed.

German concerns on the proposed employment chapter were met by text which limited EU employment "incentives" to pilot projects, but the Chancellor Kohl, in a rear guard action against what he considers Union intrusion into matters of national competence, blocked another spending element in the social policy chapter.

While the chapter will allow funding on social exclusion, the Germans appear to have successfully blocked inclusion of EU action in support of the elderly.

The Tanaiste and Minister for Foreign Affairs, Mr Spring, participated in the discussions before leaving the Council early to return home due to a family illness.