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| EU leaders struggle over treaty | EU leaders struggle over treaty |
| (20 minutes later) | |
| European Union leaders have begun a second day of tough negotiations in Brussels amid disagreements over new rules to run the 27-member bloc. | European Union leaders have begun a second day of tough negotiations in Brussels amid disagreements over new rules to run the 27-member bloc. |
| German Chancellor Angela Merkel said EU leaders were doing their "level best" to reach a compromise. | German Chancellor Angela Merkel said EU leaders were doing their "level best" to reach a compromise. |
| Germany, which holds the rotating EU presidency, has drafted proposals to replace a planned constitution rejected by French and Dutch voters in 2005. | Germany, which holds the rotating EU presidency, has drafted proposals to replace a planned constitution rejected by French and Dutch voters in 2005. |
| But both the UK and Poland are threatening to veto the blueprint. | But both the UK and Poland are threatening to veto the blueprint. |
| Thursday's outline document dropped a reference - at France's instigation - to one of the founding principles of the common market. | Thursday's outline document dropped a reference - at France's instigation - to one of the founding principles of the common market. |
| The words "undistorted competition" were replaced with talk of a social market economy and full employment, says the BBC's Alex Ritson. | The words "undistorted competition" were replaced with talk of a social market economy and full employment, says the BBC's Alex Ritson. |
| We have no outcome, no result to announce German Chancellor Angela Merkel Send us your comments | We have no outcome, no result to announce German Chancellor Angela Merkel Send us your comments |
| It was not clear if the wording would affect EU competition policy, or whether that policy was underpinned by remaining references to free markets. | It was not clear if the wording would affect EU competition policy, or whether that policy was underpinned by remaining references to free markets. |
| Talks between the German and Polish leaders opened proceedings on Friday, but the agenda was otherwise fairly loose, with bilateral talks likely to focus on key issues. | Talks between the German and Polish leaders opened proceedings on Friday, but the agenda was otherwise fairly loose, with bilateral talks likely to focus on key issues. |
| After two-way talks, the 27 leaders are set to gather again at lunchtime. | After two-way talks, the 27 leaders are set to gather again at lunchtime. |
| The Germans are at some stage expected to produce a new draft of the mandate for the future treaty. | The Germans are at some stage expected to produce a new draft of the mandate for the future treaty. |
| 'Absurd' statement | 'Absurd' statement |
| British Prime Minister Tony Blair - attending his final EU meeting before leaving office next week - has set out a number of "red lines" beyond which he will not compromise. | British Prime Minister Tony Blair - attending his final EU meeting before leaving office next week - has set out a number of "red lines" beyond which he will not compromise. |
| These include proposals to make the EU Charter of Fundamental Rights legally binding. | These include proposals to make the EU Charter of Fundamental Rights legally binding. |
| AIMS OF THE SUMMIT To replace, and reduce, the EU constitution rejected by French and Dutch voters in 2005To simplify voting procedures in an expanded EUTo replace the six-month rotating presidency of the EU with a full-time figurehead, chosen by membersA foreign policy supremo to give the EU increased weight on the international stage Sticking points and objectors 'Free competition' dropped Britain also wants to maintain national control over foreign policy, justice and home affairs. | AIMS OF THE SUMMIT To replace, and reduce, the EU constitution rejected by French and Dutch voters in 2005To simplify voting procedures in an expanded EUTo replace the six-month rotating presidency of the EU with a full-time figurehead, chosen by membersA foreign policy supremo to give the EU increased weight on the international stage Sticking points and objectors 'Free competition' dropped Britain also wants to maintain national control over foreign policy, justice and home affairs. |
| Poland's Prime Minister Jaroslaw Kaczynski says he wants to narrow the gap in voting strengths between the big and small countries, that the current draft would create. | Poland's Prime Minister Jaroslaw Kaczynski says he wants to narrow the gap in voting strengths between the big and small countries, that the current draft would create. |
| The Netherlands and the Czech Republic also have concerns about the draft. | The Netherlands and the Czech Republic also have concerns about the draft. |
| After the first day of the two-day summit, Mrs Merkel said: "We have no outcome, no result to announce." | After the first day of the two-day summit, Mrs Merkel said: "We have no outcome, no result to announce." |
| As she arrived on Friday morning she said: "We shall continue to work hard. Each and everyone of us is trying our level best." | As she arrived on Friday morning she said: "We shall continue to work hard. Each and everyone of us is trying our level best." |
| New French President Nicolas Sarkozy, for his part, said he had seen "a strong willingness to find a compromise" on Thursday. | New French President Nicolas Sarkozy, for his part, said he had seen "a strong willingness to find a compromise" on Thursday. |
| Nevertheless, there was alarm in some quarters after the Polish president said the reason his country did not have a larger population - and therefore greater voting power - was that so many Poles were killed by Germans in World War II. | Nevertheless, there was alarm in some quarters after the Polish president said the reason his country did not have a larger population - and therefore greater voting power - was that so many Poles were killed by Germans in World War II. |
| Danish Prime Minister Anders Fogh Rasmussen said it was an unfortunate statement and a distraction. | Danish Prime Minister Anders Fogh Rasmussen said it was an unfortunate statement and a distraction. |
| "It's an absurd idea to base today's decisions on a very tragic history," he said. | "It's an absurd idea to base today's decisions on a very tragic history," he said. |
| 'Main course' | 'Main course' |
| The EU leaders finished the day with a working dinner at which they set out their positions. | The EU leaders finished the day with a working dinner at which they set out their positions. |
| The British Government seems none too worried about Mr Sarkozy ripping out references to 'free trade' and 'competition' BBC Europe editor Mark Mardell Mardell's thoughts in full Polish war of words | |
| "It was dinner, but we can describe it as the entree, the main course is tomorrow," said European Commission President Jose Manuel Barroso. | "It was dinner, but we can describe it as the entree, the main course is tomorrow," said European Commission President Jose Manuel Barroso. |
| He added that Europe had been discussing institutional reform for seven years and that it was now "time to move on". | He added that Europe had been discussing institutional reform for seven years and that it was now "time to move on". |
| "What Chancellor Merkel has put on the table can deliver that capacity to act," Mr Barroso said. | "What Chancellor Merkel has put on the table can deliver that capacity to act," Mr Barroso said. |
| The German document makes several concessions to EU member states that had opposed key parts of the planned constitution. | The German document makes several concessions to EU member states that had opposed key parts of the planned constitution. |
| It removes any mention of the word "constitution", accepts that the title of EU-wide foreign minister will not be used, and provides countries with a chance to opt out of EU policies in the area of policing and criminal law. | It removes any mention of the word "constitution", accepts that the title of EU-wide foreign minister will not be used, and provides countries with a chance to opt out of EU policies in the area of policing and criminal law. |
| The draft proposes a new voting system to approve decisions; a full-time president of the European Council instead of the current system where members take six-month turns; a new foreign affairs head and a smaller commission. | The draft proposes a new voting system to approve decisions; a full-time president of the European Council instead of the current system where members take six-month turns; a new foreign affairs head and a smaller commission. |
| Correspondents say failure to reach a deal on the treaty would plunge the EU into a fresh crisis as deep as the one that followed the rejection of the constitution two years ago. | Correspondents say failure to reach a deal on the treaty would plunge the EU into a fresh crisis as deep as the one that followed the rejection of the constitution two years ago. |
| The summit has reached one decision, however: leaders agreed to allow Cyprus and Malta to adopt the European single currency, the euro, beginning in January 2008. | The summit has reached one decision, however: leaders agreed to allow Cyprus and Malta to adopt the European single currency, the euro, beginning in January 2008. |