Barroso warns Poland on treaty, Warsaw talks tough

BRUSSELS (Reuters) - The European Commission warned Poland on Tuesday it could lose money and support if it blocks a deal to reform European Union institutions at a summit this week, but Warsaw vowed to fight on.

Britain meanwhile set out last-minute demands to water down the EU's common foreign and security policy in a way that diplomats said would largely emasculate the role of a proposed European foreign minister.

Poland has demanded a change in the voting reform designed to ease decision-making in the enlarged Union, saying the new system would give big states, especially Germany, too much power at Warsaw's expense.

European Commission President Jose Manuel Barroso said the new central and east European member states who joined the EU in 2004 and this year needed to demonstrate that the 27-nation bloc was still capable of taking difficult decisions.

"I believe ... it would be in their interest for them to show that their membership of the EU is not making the union's life more difficult," Barroso said, two days before a crucial summit on the treaty to replace the defunct EU constitution.

Failure to agree on a mandate to negotiate a reform treaty would set back all EU business and weaken the mechanisms of cohesion and solidarity, he said, using two EU terms for financial transfers from rich to poor member states.

"Please avoid appearing as blocking. This is not intelligent, this is not in your interest," Barroso said.

In a swipe at British demands for exemptions from more EU policies, Barroso also said opt-outs could not become the rule in the Union, or else the bloc would eventually fall apart.

EQUAL TREATMENT

Polish Prime Minister Jaroslaw Kaczynski said his country was only seeking equal treatment, complaining that the German EU presidency had taken all other countries' concerns into account except the Polish position.

"This (Poland's position) will be defended with full ruthlessness, there is no plan B," he told a news conference.

Germany circulated a highly complex draft mandate to representatives of the 27 EU leaders, aimed at launching negotiations on a slimmed-down treaty to replace the constitution rejected by French and Dutch voters in 2005.

Polish negotiator Marek Cichocki later claimed progress, saying the Germans had for the first time officially acknowledged in a footnote to the negotiating mandate that two countries had concerns with the proposed voting system.

"This footnote is a first step in the right direction. Berlin for the first time admitted there is a problem with the voting system," Cichocki told Polish reporters after a five-hour meeting of the so-called sherpas in Brussels.

However, an EU diplomat present at the meeting said the German text merely noted that two delegations wished to raise the issue at this week's summit and gave no commitment that it would be on the agenda of negotiations for a new treaty.

Several EU leaders voiced doubts about whether the summit on Thursday and Friday would be able to reach agreement given Poland's resistance on the voting issue.

"Currently there is no proposal on the table that we know will go through, but we have a couple of days to make that happen," Finnish Prime Minister Matti Vanhanen said after a meeting of Nordic leaders in Punkaharju, eastern Finland.

Barroso said failure to agree this week would damage the EU's credibility, and weaken its voice on issues such as globalization, energy security and climate change.

Only the Czechs have lent Poland some support, while the other 25 member states insist the voting reform must stay.

British Prime Minister Tony Blair has vowed he will not allow Europe a greater say over Britain's judicial system, foreign policy or its tax and benefits arrangements.

British negotiators said London not only wanted separate legal arrangements for European foreign policy but wanted to prevent the EU foreign minister, whose title would be downgraded, from chairing meetings of national foreign ministers or speaking at the United Nations, except with permission from Security Council members.

Furthermore, London wanted the EU's proposed foreign service to be entirely inter-governmental, without including the European Commission's 3,500-strong external action service.

Gordon Brown, who will take over as prime minister when Blair steps down on June 27, joined Blair for a teleconference on the treaty with French President Nicolas Sarkozy on Tuesday.

Presidential spokesman David Martinon said the three leaders had reviewed their "red lines". Sarkozy told the Britons France wanted a treaty that "is not left with nothing in it," he said.

(Additional reporting by Terhi Kinnunen, Punkaharju, Finland, Adam Jasser and Chris Borowski in Warsaw; Adrian Croft in London and Andras Gergely in Budapest, Emmanuel Jarry in Paris)