EU ministers upbeat on treaty deal

LUXEMBOURG, Oct 15 (Reuters) European Union foreign ministers voiced optimism today that a summit this week will clinch a deal on a long-awaited treaty to reform EU institutions despite remaining snags involving Poland and Italy.

''Many of us have moved many millimetres since the start of the year. I am glad about that and so I am also confident that we'll get agreement during this week,'' German Foreign Minister Frank-Walter Steinmeier told reporters as the EU's 27 ministers began meeting in Luxembourg.

Since the bloc's leaders struck a deal on the political mandate in June, lawyers, linguists and diplomats have been working in the shadows to turn it into a treaty text, replacing the constitution rejected by French and Dutch voters in 2005.

That work is now complete and only a handful of minor issues remain involving Poland, Italy and Bulgaria. None is considered serious enough to prevent EU leaders finalising the treaty in Lisbon on Friday, or signing in December.

''I am very optimistic. There is just a small step towards an agreement,'' Polish Foreign Minister Anna Fotyga told reporters on arrival for the meeting.

Like the defunct constitution, the treaty provides for a long-term president of the EU from 2009, a more powerful foreign policy chief, a simpler, more democratic decision-making system and more power for the European and national parliaments.

Given continent-wide fatigue after a decade of wrangling over European institutions, the desire to reach the finishing line and avoid new ratification problems is widespread.

Only Ireland is bound to hold a referendum, although there is strong pressure from Eurosceptics on British Prime Minister Gordon Brown to call a vote, which he would likely lose. Barring such an accident, the treaty would take effect in 2009.

REARGUARD BATTLE Poland fought a successful rearguard battle to delay the new population-based voting system until 2017 and is still pushing to incorporate in the treaty a provision allowing states without a blocking minority to delay EU decisions for several months.

Other states want the so-called Ioannina Compromise confined to a less binding, perhaps time-limited political declaration.

Luxembourg Foreign Minister Jean Asselborn suggested Poland's demand could be met.

''I don't see any insurmountable hurdles. One possibility would be to put Ioannina in a protocol, which could be changed without having to take apart the whole treaty, he said.

Poland also seems likely to win a consolation prize with the creation of an additional post of advocate-general at the European Court of Justice for a Polish nominee.

Italy is angry at losing parity with France and Britain in the redistribution of European Parliament seats and wants that issue separated from the treaty and negotiated at a later date.

The EU assembly proposed the reallocation to take account of population trends, with Spain the biggest beneficiary.

New member Bulgaria raised the stakes at the last minute by demanding that the European single currency be written as ''evro'' in its Cyrillic alphabet, as it was in its accession treaty. The European Central Bank opposes alternative spellings of the euro.

Sofia dropped a threat to block the signing of an accord on closer ties between the EU and Montenegro today after EU ambassadors issued a declaration recognising a ''linguistic-technical problem'' and promising to solve it soon.

Britain said it was satisfied with various opt-outs it had negotiated from the treaty's provisions on social and home affairs issues. ''People will see that the British national interest has been very clearly defended,'' said Foreign Minister David Milliband.

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