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EU foreign ministers failed to resolve a key dispute over budget rules on Monday, adding to the burden facing their leaders who meet at the end of the week for a make-or-break summit on the bloc's constitution.
Diplomats said the Netherlands, Austria, Belgium and Luxembourg insisted that the executive European Commission must have powers to enforce budget discipline, as proposed in the draft constitution drawn up by EU lawmakers last year.
But Germany and France, whose excessive deficits have dismayed smaller European Union member states, said plans for the Commission to have more clout must be rolled back.
"We have to fight to the bitter end for our position," Dutch Foreign Minister Bernard Bot told Reuters after he and his counterparts punted the thorny issue to the 25-nation bloc's leaders to handle at a Thursday-Friday summit in Brussels.
The constitutional treaty, in preparation since early 2002, is designed to make the EU run more smoothly following its enlargement to 25 members from 15 last month.
The need to overhaul EU institutions, seen by many of the bloc's 450 million citizens as remote and irrelevant, was underlined at the weekend by a record low turnout in European Parliament elections.
"One clear message is that voters across Europe... want a European Union that works better in their interests," British Foreign Secretary Jack Straw told reporters in Luxembourg.
European voters delivered a massive vote of no confidence in most serving governments, setbacks Polish Foreign Minister Wlodzimierz Cimoszewicz said would make it even harder for leaders to make concessions on the constitution at the summit.
"The agreement is possible but it is politically more difficult," Cimoszewicz told reporters, adding that weakened governments would now also find it harder to see eye-to-eye on their choice for a new president of the European Commission.
Failure to reach agreement on both issues would be, he said, "another powerful signal of the EU's weakness".
An EU summit collapsed last December amid acrimony over the constitution, which would define how power is distributed among member states, extend majority voting to more issues rather than insisting on unanimity, set the size of the Commission and create a long-term president and foreign minister for the bloc.
EU president Ireland made proposals on Sunday to overcome key Dutch and British objections, but it left core disputes over voting powers and the size of the Commission for the summit.
The Netherlands wants legally binding rules anchored in the charter to enforce discipline on countries which run excessive budget deficits - like France and Germany at present.
Dublin suggested appending a declaration to the constitution reaffirming the EU's commitment to the Growth and Stability Pact and stressing the need for sound budgetary policy throughout the economic cycle.
Under this compromise, the Netherlands would been expected to drop its demand that the constitution give the European Court of Justice power to supervise enforcement of the budget rules.
But Bot rejected the proposal, branding it "unsatisfactory".
The Irish proposals appeared to address most British "red lines" for preserving national vetoes on sensitive policy areas such as taxation and foreign and defence policy, though diplomats said Britain would still be seeking more ground.
"We believe a deal is still possible," British Prime Minister Tony Blair's official spokesman said. "The latest drafts showed progress in the right direction".

Copyright Reuters, 2004

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