BRUSSELS European Union leaders hope to reach a deal at a summit this week removing the last obstacles to a treaty to give the bloc more global clout, but face a battle over funding for a global climate change agreement.
Failure to break the deadlock would risk leaving the 27-country bloc looking impotent when it is trying to strengthen its role on the world stage and the influence of emerging powers such as China is growing following the economic crisis.
EU leaders say publicly they are hopeful of breaking the impasse on both issues. But much depends on quiet diplomacy in the run-up to the summit in Brussels on Thursday and Friday.
The chances of a breakthrough over the Lisbon reform treaty rose on Friday when Czech President Vaclav Klaus, the only EU leader holding out against the charter, welcomed proposals by the EU's Swedish presidency for securing his signature.
"I expect that some solution is possible, in my opinion. I'm optimistic about the whole issue," European Parliament President Jerzy Buzek told Reuters in an interview.
The treaty sets out reforms to ease EU decision-making and creates two new posts, a new long-term president and a foreign policy chief with enhanced powers for a bloc that now represents almost 500 million people.
As a condition for signing, Klaus has demanded an opt-out from a rights charter that is attached to the treaty, saying he wants to shield the Czech Republic from property claims by ethnic Germans expelled after World War Two.
Diplomats say EU heads of government should now be able to agree on a political declaration that enables Klaus to save face but makes no changes to the Lisbon treaty.
"I think they can find a way to give Klaus what he wants without it really meaning anything except saving face for him," said Hugo Brady of the Center for European Reform think tank.
Czech ratification also depends on a review by the country's Constitutional Court, but it is widely expected to approve it, possibly before the summit. Klaus would then be expected to sign it and the treaty could go into force by the end of the year.
CLIMATE CHANGE DEAL
The leaders are less likely to agree at the summit on funding for a global climate change deal that will be negotiated at talks in Copenhagen in December, EU diplomats say.
"This will be serious because then we will have no position on funding (for the Copenhagen talks)," a senior diplomat said.
Funding to help poor nations combat climate change is the main obstacle to success in the talks in Copenhagen on a new deal to combat global warming.
A draft summit statement seen by Reuters gave no precise figure for the financial contribution the EU would make to help the developing countries.
EU member states are also split over how much to contribute before the new climate deal starts. Nine of the bloc's poorer countries want the early contributions to be voluntary and EU finance ministers gave up trying to resolve the issue last week.
The EU leaders could also discuss at the summit who will be the new long-term EU president and foreign affairs chief, but it is not certain they will get on to discussing names because the Lisbon treaty creating the posts is not yet in force.
Even if the EU emerges from the summit with agreement on the main issues, the delays over the treaty -- which has been in the works for years -- and the divisions over climate change funding have had an impact on the bloc's image.
"The question is does the EU have the capacity to act on behalf of the people? And does it have the capacity to act on the world stage?" Brady asked. "There has been so much discussion of just little passages of text. It's sickening."