EU leaders lock horns

Protests inside and outside the summit venue

European Union leaders have been locked in intensive talks at their summit in the French city of Nice over far-reaching proposals aimed at streamlining decision-making.

The changes, proposed by France which holds the EU presidency, are designed to help the union stay manageable as it takes in up to 13 new members over the coming years.

We are advancing laboriously, but we are advancing

French Foreign Minister Hubert Vedrine

But although the French draft contains several compromises on key contentious issues, it has provoked concern from many existing member states.

At issue are national vetoes and how much representation each country should have in EU structures.

EU delegates said the 15 leaders had agreed to continue discussions into Saturday evening and then reconvene after breakfast on Sunday, rather than talk through the night.

Veto rights

UK: Taxation, social security, border controls, defence, treaty changes, budget contributions

France: Financial services, cultural affairs

Germany: Immigration and political asylum

Spain: Regional aid

A number of the union's biggest countries, including the UK, France, Germany and Spain, are reluctant to give up national vetoes in significant areas.

And many smaller countries in the bloc stand to lose voting power and one of their European commissioners.

Portuguese Prime Minister Antonio Guterres described the French document as an institutional "coup d'etat". The reaction of Dutch Prime Minister Wim Kok is said to be unprintable.

Compromises

French President Jacques Chirac and Prime Minister Lionel Jospin tried to prepare the ground by meeting other leaders individually on Friday night in a series of private meetings to find out what was negotiable and what was not.

Mr Chirac has won concessions from Germany

If accepted, the agreement would retain the equal voting rights of Germany with the other major European countries despite the former's request for more votes.

In return for retaining equal status with Germany, France has accepted a move to majority voting in trade in services.

The draft also proposes maintaining national vetoes on most aspects of taxation, while switching to majority voting on measures to fight tax fraud.

And provision has been made for the EU to introduce majority voting on some aspects of indirect taxation and company tax, but only after a unanimous vote and a five-year transition period.

This will be opposed by Britain, which is also against the presidency's plan to remove the veto on social security issues.

But the UK's European Affairs Minister Keith Vaz told the BBC that otherwise the proposals represented a good deal.

Old structures

The current voting system was designed for the original six-member European Coal and Steel Community, the EU's early predecessor, not the EU that could have as many as 28 members within the next decade.

An official statement from the EU leaders on Friday said they hoped some new members would be ready to join the union in time to "participate in the next European Parliament elections" in 2004.

However, President Chirac emphasised that there was "no commitment for the entry of this or that country. There is no commitment on dates," he told the Associated Press news agency.

Military compromise

France and Britain did reach a compromise over the new rapid reaction force announced on Friday, which the US had made clear should not compete with Nato.

Mr Chirac maintained his good humour on Friday

The declaration states specifically that it does not involve the establishment of a European army and links the force to Nato, despite France's call for it to have an independent planning structure.

It has yet to be decided whether a core group of states should be allowed to forge ahead with greater military co-operation - a move that is strongly opposed by the UK.