03 May 2004	Monday	12 Rabi-ul-Awwal 1425

DUBLIN: After a weekend of partying to celebrate its historic eastward expansion, the enlarged European Union faces daunting challenges to prove the bloc can keep functioning with 25 members.

Within six weeks, EU leaders must agree on a first constitution for the Union, six months after they acrimoniously failed, and find a successor to European Commission President Romano Prodi, whose term expires in October.

This sensitive battle over power and influence, waged amid a campaign for June 10-13 European Parliament elections in which many governments face protest votes, has been complicated by Britain's decision to hold a referendum on the charter.

Prime Minister Tony Blair's gamble has raised doubts about whether the constitution will ever be ratified. Irish Prime Minister Bertie Ahern said on Saturday that tying up negotiations on member states' voting power and national vetoes would be tough and come down to a poker game among the four main protagonists - Germany, France, Spain and Poland - in the final 48 hours at a June 17-18 Brussels summit.

He lost no time in starting a round of consultations with leaders, starting with Slovenia's prime minister on Sunday. With new governments in Madrid and Warsaw, a shared determination to display unity in the face of terrorism and a desire to show the new Europe remains capable of taking decisions, leaders sounded confident of a deal.

"Governments need good news," Portuguese Prime Minister Jose Manuel Durao Baroso said after Saturday's flag-raising ceremony to welcome the 10 new member states.

STRENGTHENED HAND: Diplomats say Blair's referendum decision has strengthened his hand in preserving national vetoes on his "red line" issues of tax, social security, defence and foreign policy since no one will want to make a British "no" vote more likely.

It also has raised speculation that EU External Relations Commissioner Chris Patten, a pro-European British Conservative, might be a contender to succeed Prodi. He conspicuously avoided denying the report at the weekend.

Patten, so the argument goes, would be uniquely placed to help sell the constitution to a sceptical British electorate and reconcile Britain with Europe 30 years after it joined the bloc, if that is possible. But the idea, floated in the Financial Times by former French President Valery Giscard d'Estaing, may not appeal to the EU's traditional leaders, France and Germany, who would prefer a centre-right candidate from a euro zone member.

Other possibilities include Luxembourg Prime Minister Jean-Claude Juncker, although he appears to have ruled himself out, Belgian Prime Minister Guy Verhofstadt or even his predecessor, Jean-Luc Dehaene, vetoed by Britain in 1994.

Austrian Chancellor Wolfgang Schuessel appears to be excluded by his coalition with the hard-right Freedom Party. Once they have cleared the constitution and Commission hurdles, EU leaders face more tough decisions over the ultimate borders of Europe and its future budget and spending priorities.

In December, they must decide whether to open accession talks with Turkey, which is racing to enact legal reforms to meet EU criteria on democracy, the rule of law, minority rights and civilian control over the military.

Opinion polls show mounting anxiety in West European public opinion at the prospect of the giant, mainly Muslim country of nearly 70 million, far poorer even than the EU's East European newcomers, joining the bloc.

France's governing UMP party and Germany's opposition Christian Democrats oppose Turkish membership, but a positive recommendation by the European Commission in October would be hard for EU leaders to go against.

By then, the EU will be plunged into what is likely to be an ill-tempered battle over its 2007-2013 budget, pitting rich West European net contributors keen to cap spending against newcomers and poorer old member states Spain, Portugal and Greece, who want to increase or protect aid to their poor regions.

France and Germany have already effectively ring-fenced farm spending, which swallows 45 per cent of the budget, for another decade at current levels. That means the main battle is likely to be over how quickly to phase out regional aid to the old member states which are no longer statistically poor since enlargement lowered the EU's average wealth per capita.

Beyond this noisy, politically sensitive but economically ultimately insignificant battle, the struggle over far-reaching economic and fiscal reform in an ageing, low-growth western Europe may be the real determinant of how the enlarged EU fares.

Some experts see the newcomers, with far higher growth rates as they try to catch up with western Europe, adding momentum for reforms of European welfare, pensions and labour market systems and pressure to lower taxes and lighten regulation.

"Enlargement will put further pressure on the EU's institutional machinery, which is already rattling and wheezing with 15 countries," said Heather Grabbe of the London-based Centre for European Reform.

Previous EU enlargements had led each time to significant steps forward in integration, she noted. The new member states raised issues requiring new EU policies to cope with greater social and economic disparities, manage the bloc's external frontiers, improve governance, tackle corruption and protect minorities, she argued. -Reuters