EU summit: Main issues

The last summit of the EU's Czech presidency is under way in Brussels, with the Lisbon Treaty and financial regulation high on the agenda. What do EU leaders hope to achieve at this two-day meeting?

LISBON TREATY

The focus here is on the wording of guarantees for the Republic of Ireland, aimed at securing a "Yes" vote in a second referendum on the Lisbon Treaty. Irish voters rejected the treaty just over a year ago.

The referendum is crucial to the treaty's future. It is probably the last big hurdle, as nearly all the 27 member states have now ratified it, though the British Conservatives' pledge to hold a referendum, if elected, has made this a race against time.

The guarantees will cover what Dublin identified as key areas of concern for Irish voters, guaranteeing that the treaty will not affect the country's military neutrality, tax policy and anti-abortion laws.

These EU assurances are to be made specific to the Republic of Ireland and robust enough to resist any legal challenge in the EU. Above all, the leaders want to close any legal loophole that could be used to reopen the Lisbon Treaty negotiations.

Ireland had pushed for the new guarantees to be attached to the treaty in a new protocol, but Britain - keen to avoid fuelling calls for the treaty to be subjected to a new round of ratification - has led opposition to this plan.

They are therefore expected to take the form of a legally binding political decision by the European Council - the EU prime ministers and presidents

The number of EU commissioners is to be kept at 27, again to accommodate Ireland, though the original plan was to have 18 as from 2014. But this point is expected to be separate from the list of guarantees.

The leaders' decision is expected to be modelled on the legally binding agreement made with Denmark after its voters rejected the Maastricht Treaty in 1992. It would not require approval by other EU institutions.

It is not yet clear whether the decision will be incorporated into a subsequent EU treaty. France has suggested it could be added to Croatia's EU accession treaty, when that is ready for ratification.

A second Irish "No" vote would be deeply humiliating for EU leaders. They have spent years working on the institutional changes they deem necessary to make the enlarged bloc perform efficiently.

FINANCIAL REGULATION

The banking crisis looms large over this summit, so the powers of new EU regulatory bodies will be hotly debated.

The discussions centre on recommendations by an expert panel headed by Jacques de Larosiere, a former IMF managing director.

The UK government, anxious to maintain the global authority of the City of London, is wary of the European Central Bank chairing the proposed new European Systemic Risk Board. Its job would be to spot any threats to financial stability across the EU. The UK and a few other EU nations do not want this key role to be monopolised by the 16-nation eurozone.

There are also concerns about the proposed European System of Financial Supervisors, whose job would be to monitor individual financial firms. The big question is whether these European regulators would be able to overrule a national government, for example by instructing it to bail out a particular firm.

The UK insists it should have the final say over its taxpayers' money. The multi-billion-pound bailouts of Northern Rock, Lloyds TSB and HBOS highlight the sensitivity of this issue.

The Czech Republic says it wants to secure a political deal that would empower the European Commission to create a new supervisory framework. The goal is to put the blueprint into action next year.

COMMISSION PRESIDENT

The leaders also have the easier task of proposing the conservative Jose Manuel Barroso for a second five-year term as EU Commission president. The commission is the EU's executive arm, responsible for drafting laws.

Mr Barroso, from Portugal, has no rival - and even has backing from some centre-left leaders.

But the leaders want to avoid conflict with the European Parliament over the choice - and there is some opposition to Mr Barroso there. So at this summit they are expected to give him political backing - leaving a formal nomination until later.

Sweden, which takes over the EU presidency next month, says it wants to get Mr Barroso elected as soon as possible - as early as mid-July.

CLIMATE CHANGE

The summit will also touch on preparations for the UN conference on climate change, to be held in Copenhagen in December.

The Czechs want the debate to focus on EU support for developing countries, to help them mitigate the effects of climate change.

"We need a simple, effective and accountable system that ensures that only real reductions of emissions receive financial support," Czech Prime Minister Jan Fischer said recently.