Merkel Sees Snags Over EU Treaty as Poland Holds Firm (Update1)

June 18 (Bloomberg) -- European Union leaders face ``serious'' obstacles to a deal on the bloc's constitution after Poland stood firm in objecting to a proposed new voting system, German Chancellor Angela Merkel said.

Merkel, chairwoman of a June 21-22 EU treaty summit in Brussels, said Poland continued to balk at surrendering more power over EU decisions to larger countries such as Germany.

Poland's ``position on the issue hasn't changed,'' Merkel said at a press conference in Luxembourg late yesterday. ``We still have some serious problems to solve before the summit.''

Merkel is trying to rally the 27-nation EU behind the broad outlines of a new governing treaty to replace the constitution that was rejected by French and Dutch voters in 2005, throwing the bloc into institutional paralysis.

All EU leaders signed off in 2004 on the constitution, which would streamline decision-making and create the posts of president and foreign minister. It requires unanimous ratification and so far 18 of the 27 member states have done so.

Europe is under pressure to get out of the constitutional impasse, Merkel said after talks with Prime Minister Jean-Claude Juncker of Luxembourg, which has ratified the document.

``The world isn't waiting for Europe,'' Merkel said. ``There are lot of problems to deal with and Europe can't stay obsessed with itself.''

In a status report sent to EU governments last week, Germany proposed calling the new rules a ``Reform Treaty'' instead of ``constitution'' to quiet concerns about the EU intruding on national powers.

Critic

Juncker called on the EU to salvage the ``substantive elements'' of the constitution and not to water it down under pressure from countries that vetoed it or, like Britain, have yet to ratify it.

Poland is the harshest critic of the proposed streamlining of the decision-making system, threatening to block any revamp that strengthens the hand of larger countries such as Germany, France and Britain.

``We will never agree to what is being proposed to us now,'' Prime Minister Jaroslaw Kaczynski said last week. The prime minister's brother, President Lech Kaczynski, pressed Poland's case to Merkel at a meeting in Germany over the weekend.

Germany wants to keep the system used in the constitution, under which laws would pass when backed by a ``double majority'' of at least 55 percent of the national governments representing at least 65 percent of the EU's population.

Votes

Poland contends that the system would give the upper hand to Germany, home to 82.4 million of the EU's 486 million people. Poland, with a population of 38.5 million, proposed assigning votes based on the square root of each country's population.

Germany would get nine votes and Poland six under that formula, which Poland, backed only by the Czech Republic, is pushing for. ``Square root or death'' is the rallying cry, the Polish prime minister said last week.

While there is ``a lot of willingness to compromise,'' German Foreign Minister Frank-Walter Steinmeier told reporters today in Luxembourg that he has ``heard counterarguments from some member states that remain skeptical.''

New French President Nicolas Sarkozy favors a ``simplified'' treaty that strips out EU symbols like a flag and anthem that served as lightning rods for opponents in the 2005 referendum. The Dutch government has also endorsed a scaled-back document.

British Veto

Britain, clinging to a veto over EU criminal-law decisions, is leading a group of countries in refusing to grant legal supremacy to a charter of fundamental rights. The British government fears it could override British law.

Prime Minister Tony Blair last week ruled out any treaty that gives away control over British policies on labor, justice, welfare or foreign affairs. This week's summit is Blair's last before handing over to Chancellor of the Exchequer Gordon Brown.

This week's negotiations will be ``quite difficult,'' U.K. Foreign Secretary Margaret Beckett said yesterday.

``It's far from clear what proposals the German presidency feels able to put,'' Beckett told the BBC's ``Sunday AM'' show. ``We don't want to see a constitutional treaty or a treaty that has the characteristics of a constitution.''

In-depth negotiations will start after Portugal takes over the EU presidency in July, and would need to end by December so all 27 countries can ratify the new treaty in time for the mid-2009 European Parliament elections.

To contact the reporter on this story: James G. Neuger in Luxembourg at jneuger@bloomberg.net

To contact the editor responsible for this story: Eddie Buckle at ebuckle@bloomberg.net