EU Leaders to Avoid Tough Topics at Summit

The summit talks, amid the Tudor splendour of Hampton Court Palace outside London, are officially aimed at working out Europe's strategic response to the threat typified by rising Asian giants like China and India.

But looming over the meeting like a royal specter will be the dual challenge of a deadlock over the bloc's future budget, and the more fundamental question of its whole future, following the rejection by France and the Netherlands of the EU constitution.

"I hope we can avoid getting into detailed discussions of the future financing issue at Hampton Court," said British Prime Minister and summit host Tony Blair, referring to talks on the 2007-2013 budget for the 25-nation bloc.

The budget standoff is of particularly urgent concern to the 10 new, mostly ex-communist, countries which joined the EU last year and need a resolution to unblock key EU funds for their still relatively poor economies.

Response to globalization

But while some still want to discuss finances, formally the one-day meeting -- cut down from two after some EU leaders clearly thought there was not enough meat to justify the overnight stop -- will tackle the lofty subject of Europe's future in the age of "globalization."

Traditional EU heavyweights France and Germany -- whose outgoing social democratic leader Gerhard Schröder will be attending his last summit -- will be keen to defend their long-cherished vision of Europe's "social model."

But Blair, who currently holds the EU's rotating presidency, will be equally keen to bang the drum for the kind of free-market reforms espoused by Schröder's successor Angela Merkel.

The main theme of discussions will be "the opportunities and challenges of globalization," Blair said in his letter of invitation to the summit. "How do we meet the competitive challenge and maintain the security of our citizens in a world of unprecedented movement?"

French viewpoint

French President Jacques Chirac -- whose long-strained relations with the British leader have reached a new nadir amid the EU budget standoff -- can be counted on to have diverging views from the summit host.

Paris has long been the champion of a European economic model which puts far more emphasis on generous social protection, workers' rights and ensuring that key state enterprises remain viable.

Indeed, the summit takes place against the background of world trade talks in which France is fiercely defending the EU's long-disputed Common Agricultural Policy (CAP), of which French farmers are the main beneficiaries.

The CAP is at the heart of the budget standoff: Britain is pushing hard for further reform of its trade-distorting payouts. But France is standing firm, while countering that Blair must surrender London's long-cherished EU rebate.

While serious budget haggling is not on the menu in Hampton Court, there is hope for some "informal discussion" in the corridors of Henry VIII's palace by the Thames, possibly even making some progress ahead of a December showdown.

Constitution question

But no progress -- and precious little discussion -- is expected on the other key problem facing the EU: the rejection of its constitution by French and Dutch voters, which plunged the bloc into crisis in June.

The institutional blueprint was designed to avoid decision-making gridlock in the still-expanding Union, which is set to welcome Romania and Bulgaria in 2007 with a line of others waiting at the EU door.

Few expect any progress on the issue until after French presidential polls in 2007, when some hope that Chirac may be succeeded by a more popular leader -- such as Nicolas Sarkozy -- who could somehow turn the French "non" around.

But the prospect of the charismatic rightwinger in the Elysee Palace -- following the German transfer of power to Merkel -- raises another thorny strategic issue for the European bloc: Turkey.

The EU overcame last-minute problems this month to start membership talks with the vast mostly Muslim state. But both Merkel and Sarkozy are openly opposed to Turkey ever actually joining.

That issue may, again, be discussed in the sidelines of this week's summit. But in the formal talks Blair will be keen to keep the focus squarely on more general strategic issues.