EU leaders strike final deal on reform treaty

LISBON, Oct 19 (Reuters) European Union leaders struck a final agreement today on a treaty to reform the 27-nation bloc's ailing institutions after making last-minute concessions to Italy and Poland.

''With this treaty, Europe is showing that the European project is on the move. Now we can look forward to the future with confidence,'' Portuguese Prime Minister Jose Socrates said after chairing a summit which toasted the accord with champagne.

He said the document would be signed on December 13 in Lisbon.

Provided it is ratified by all 27 member states, the treaty will take effect in 2009 giving the EU a long-term president, a more powerful foreign policy chief, a more democratic decision making system and more say for the European and national parliaments.

The deal, clinched shortly after midnight after an evening of negotiation, ends a crisis of confidence sparked by Dutch and French voters' rejection of a European constitution in 2005.

The more modest treaty is not styled as a constitution and omits any mention of an EU anthem or flag.

European Commission President Jose Manuel Barroso told a news conference: ''We have said many times that reform is not an end in itself. With these institutions now, we can look after the most important priorities for our citizens.'' In the final wrangling, Italy won one extra seat in the European Parliament. Poland won a guarantee that a provision allowing small groups of states to delay EU decisions could only be overturned by unanimity, plus a permanent advocate-general's job at the European Court of Justice for a Pole.

Warsaw, which before the start of the two-day summit had threatened to delay the talks if its demands on new voting arrangements were not met, said its key demand had been met.

''Poland achieved all it wanted,'' President Lech Kaczynski told reporters.

Poland had fought against the changed voting system at a bitter summit in June, saying it would give too much power to Germany, Europe's most populous nation, at Warsaw's expense.

BRINKMANSHIP Other leaders ascribed Kaczynski's brinkmanship to the fact that Poland holds an early parliamentary election on Sunday. The president's brother, Prime Minister Jaroslaw Kaczynski, is fighting for re-election and flagging in opinion polls.

Warsaw's main demand was to enshrine in the treaty, or as a protocol, the so-called Ioannina compromise enabling groups of countries just short of a blocking minority to delay a decision for a ''reasonable time'' -- in practice, several months.

The EU has spent a decade agonising over how to reform its institutions to cope with its near doubling in size from 15 to 27 members.

British Prime Minister Gordon Brown, rejecting domestic pressure to hold a referendum on the treaty, used the term ''British national interests'' 19 times in a news conference at which he defended new arrangements which Britain has demanded to ensure its sovereignty is not undermined by the charter.

''At every point we have been determined to protect the British national interest and to ensure that the interests of the British people are safeguarded, '' he told reporters.

Italy went into the summit insisting on maintaining parity with France and Britain in European Parliament seats, despite a reallocation plan proposed by the assembly which would give it fewer deputies based on population size.

The Portuguese compromise, backed by the three main political groups in parliament, gives Italy 73 seats, like Britain, but one fewer than France.

One snag was removed when Austria accepted a European Commission move to suspend legal action against it for five years over quotas on foreign students, designed to stop medical students from neighbouring Germany swamping its universities.

Another was solved when EU leaders agreed to allow Bulgaria the right to spell the common euro currency as ''evro'' in its Cyrillic language, despite the insistence of the European Central Bank that euro be spelled the same in all 27 EU states.

REUTERS RKM BST0705