Blair fighting to retain veto on tax and foreign policy

Tony Blair arrived in Brussels last night to put forward the case for Britain to retain its veto on tax and foreign policy under the new European Union constitution to be discussed by EU leaders this weekend.

Mr Blair went straight into a meeting with Silvio Berlusconi, the Italian Prime Minister, which holds the EU's rotating presidency. His intention was to clarify the two "red lines" he will not cross during intense negotiations at the summit.

Although Britain has won concessions on the draft treaty's wording on criminal justice and social security, Mr Blair is determined to safeguard Britain's ability not to have tax or foreign policy decisions imposed on it by the EU. He will reinforce the point at a working breakfast today with Jacques Chirac, the French President, and Gerhard Schr?der, the German Chancellor. The three leaders are expected to seal an agreement on EU defence co-operation.

British ministers believe the final stumbling block at the summit to agreement over the constitution will be the dispute over whether Spain and Poland should accept a cut in their voting power on the EU's Council of Ministers. "We think that will be the last issue to be resolved and that it will go to the wire," said one British source.

What officials call the "nightmare scenario" for Britain is if a deal is struck on voting strengths early in the summit, leaving Mr Blair's objections on tax and foreign policy the final barrier to an agreement. But they are confident the Prime Minister will win enough "new language" on the two issues to claim he has successfully defended his "red lines".

Yesterday, Jack Straw, the Foreign Secretary, insisted that Britain would rather walk away from the negotiating table than sign a bad deal. "We want a treaty which makes the EU work more effectively, but neither we nor our partners are seeking an agreement for the sake of agreement," he said.

Mr Straw added: "We have made some progress, but there is still a lot of hard negotiating to be done." He said that he did not know whether an agreement would "gel" until the summit got under way today.

The Foreign Secretary outlined a possible compromise, under which Britain would allow the Council of Ministers to take decisions on tax fraud and foreign policy by qualified majority voting (QMV), but would have an "emergency brake" allowing it to refer the decision to the European Council, made up of EU heads of government, where Britain would enjoy a veto.

Mr Straw, who has said that "life will go on" in the EU if no agreement is reached this weekend, adopted a more positive approach to the summit yesterday, saying that the proposed treaty "does matter". He added that the EU could continue working under its current arrangements, but a system designed for a six-member Union could not cope with the 25-strong bloc it will become next spring.

He rounded on British Eurosceptics, saying that their "language of betrayal is profoundly defeatist" and dismissing their vision of a "fantasy superstate". He said: "Europe is not a threat, it is an opportunity for a confident, dynamic Britain to strengthen its security and prosperity."

Berlusconi seeks a miracle to wrap up new Treaty of Rome

"It will be a miracle" if the EU's intergovernmental conference concludes under Italy's presidency, Silvio Berlusconi said on arrival in Brussels yesterday. "But sometimes miracles happen."

Mr Berlusconi's chairmanship of the EU's crucial conference this weekend is an unprecedented test of the statesmanship of a man widely seen as anything but a statesman.

He has made no secret of his ardent desire to wrap up the new constitution without delay, so that a new Treaty of Rome can be signed next spring. He claims warm friendships with key figures who must be won over, especially Spain's Prime Minister, Jose Maria Aznar, and Tony Blair, and there has been speculation that this may help him to pull a face-saving deal out of the hat.

But despite such fond hopes, it is probable that most participants at the conference would rather have practically anyone else in the chair than Italy's richest man. He got Italy's presidency off to the worst possible start when, losing his temper under stinging criticism after making the inaugural speech at the European Parliament in Strasbourg, he compared a German Social Democratic MEP with a concentration camp guard. He subsequently offered only a tepid apology for what he continued to insist was only "an ironic joke".

Since then, he has done nothing to persuade other European leaders that he has shed the aura of amateurism.

He told two British journalists that Mussolini "never killed anyone" and then tried to explain the remarks by implying that he had been drunk when he made them. He infuriated EU commissioners and policy makers when, after a meeting with Vladimir Putin, he pooh-poohed Russian crimes in Chechnya. But he has made Italy Israel's "best friend in Europe", in the words of the Israeli Prime Minister, Ariel Sharon, but has left the impression that he is more interested in currying favour with George Bush than in strengthening the EU.

A miracle is exactly what Mr Berlusconi and the EU will require this weekend.

Peter Popham