WRAPUP 7-Poland rejects compromise over EU treaty

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By Marcin Grajewski and Niclas Mika

BRUSSELS, June 22 (Reuters) - Poland rejected a compromise offer over a new treaty to reform the European Union, delivering a blow to other EU leaders' hopes of reaching an agreement on Friday.

"We have hit a wall," Polish Prime Minister Jaroslaw Kaczynski said on Polish television, adding he feared there may be no solution to the stand-off at an EU summit in Brussels.

"The lack of any willingness to back down is very clear on the side of our partners and I am afraid there may be no way out...I am very sorry about that," Kaczynski said.

He made the announcement as his twin brother, President Lech Kaczyinski, met German Chancellor Angela Merkel at the tense summit to give her Poland's official response to the offer.

Other leaders said the Polish rejection of the compromise offer, drawn up by Merkel and French President Nicolas Sarkozy, could prove to be just another round in the high-stakes wrangling with Warsaw.

"Sometimes (the Poles) are a little bit more pro, sometimes they are a little bit against. We have different stages during the day, but there will be a result, I am convinced," said Austrian Chancellor Alfred Gusenbauer.

The leaders had earlier on Friday scored a first success in their two-day summit by reaching a broad agreement on creating a new, single post to run the 27-nation bloc's foreign affairs.

But the meeting risked failure over the attempt to overhaul the EU's rickety institutions with a new treaty, two years after a more ambitious constitution was rejected by voters in France and the Netherlands.

Poland was holding out against a planned re-weighting of voting rights which it says would favour Germany at its expense, and Britain also stood its ground on other issues.

Merkel, hosting the summit at the end of Germany's six-month presidency of the Union, says the treaty will help the EU face challenges such as global warming.

Critics fear a dilution of national sovereignty.

Merkel met Polish President Lech Kaczynski at least four times on Friday to try to break the impasse and the negotiations were expected to stretch into Friday night.

EU leaders were shocked by Poland's repeated references to its suffering at the hands of Nazi Germany during World War Two to justify its opposition to the voting system. It says it would have a larger population were it not for heavy wartime losses.

POSSIBLE COMPROMISE

Under the compromise rejected by Warsaw, Poland would have accepted a lower voting weight within the EU in return for compensation in other areas.

The new voting rules would have been introduced in 2014, instead of 2009 as originally planned, and given countries that fall just short of a blocking minority on controversial issues the chance to force further negotiations.

Warsaw would also be given guarantees that the rest of the bloc would back it in the event of future energy crises, a concern of Poland which neighbours gas and oil exporter Russia.

The EU leaders agreed on the job title, role and powers of a High Representative of the EU for foreign policy, defence and security. The post will combine the jobs of foreign policy chief Javier Solana, who does mostly crisis management, and External Relations Commissioner Benita Ferrero-Waldner, who controls the executive European Commission's aid budget.

The new foreign policy chief would chair meetings of EU foreign ministers and head a combined external action service drawing on both national and EU diplomats, after Britain dropped its reservations on those points, the diplomats said.

British Prime Minister Tony Blair said he also saw progress on other areas of the treaty that London opposes.

Britain does not want to be legally bound by a Charter of Fundamental Rights, which includes a broadly defined right to strike, is seeking an opt-out from EU justice cooperation and opposes obligatory social security payments to migrants.

Failure at the summit could prompt a small group of states to press ahead with closer integration, leaving others behind, and make richer west European countries more reluctant to aid poorer newcomers.

Nearly all the EU states favour a "double majority" voting formula requiring 55 percent of member states representing 65 percent of the EU population to pass decisions.

Poland has proposed an alternative under which voting power would be based on the square root of each country's population. This would favour smaller states.

Eighteen EU nations ratified the constitutional treaty, but even they accept it must be cut to allow France, the Netherlands and Britain to avoid referendums their governments might lose.

Yet some key institutional changes are set to be kept, such as creating a president of the European Council of governments elected for 2-1/2 years instead of the unwiedly six-month rotating presidency.

Keywords: EU TREATY/