UPDATE 2-Merkel warns of "historic failure" on EU charter

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By Darren Ennis

STRASBOURG, France, German Chancellor Angela Merkel, seeking to revive a stalled EU constitution, warned on Wednesday of the risks of a "historic failure" that would leave the bloc divided and mired in bureaucracy.

Merkel said Germany would aim by the end of its six-month presidency of the European Union in June to offer a plan for resolving the deadlock before European Parliament elections in mid-2009, but offered no hint of how a compromise could look.

"A collapse (of that process) would be a historic failure," Merkel told the European assembly of efforts to overcome the deadlock created in 2005 when French and Dutch voters rejected a charter designed to reform Brussels' unwieldy institutions.

"A lumbering bureaucratic, divided Europe will not solve the challenges it faces, be they in foreign and security policy, climate and energy, European research, cutting red tape or in dealing with enlargement and with our neighbours," she said.

Appealing for the EU to deepen ties with the United States and Russia, and make its influence felt from the Balkans to the Middle East and Africa, Merkel said it was time the EU had its own foreign minister -- a key provision of the constitution.

Jose Manuel Barroso, president of the executive European Commission, said any final compromise must "clear the clouds of doubt which hang over parts of Europe".

With French President Jacques Chirac and British Prime Minister Tony Blair set to leave office this year, Merkel has emerged as Europe's most influential leader.

But German officials say what she can achieve depends on who is elected French president on May 6. Analysts and politicians said at the time the "No" votes, particularly in France, partly stemmed from concerns that cheap labour from the new member states of the east would take away jobs in western Europe.

CALL TO WASHINGTON ON TRADE, CLIMATE

A week after the European Commission laid out ambitious plans to lead the world in cutting greenhouse gases, Merkel signalled that Berlin would aim to reconcile such policies with Europe's need to guarantee secure energy supplies.

She urged Washington to do more to tackle climate change.

Some speakers demanded proof that Merkel genuinely backed efforts to liberalise energy markets, accusing her of siding with some other EU leaders who preferred national champions.

"It's no good trying to protect energy giants like EDF and E.ON in the hope that they can stand up to Gazprom," British Liberal Graham Watson said of rivalry between Russian gas monopoly Gazprom and French and German energy giants.

Merkel called for closer trade ties with the United States, saying Brussels and Washington should cut barriers in areas such as patent rights and stock market access.

Aside from difficulties with France and the Netherlands, Germany faces an uphill struggle to convince governments in the seven other states that have not yet ratified the constitution.

Britain, Poland and the Czech Republic, which promised referendums but never held them after the French and Dutch said no, have cold feet about the treaty, diplomats say.

Behind the scenes, Germany is sounding them out on what would have to be removed from the text ratified so far by 18 member states to enable the remaining countries to endorse it, preferably without referendums, the diplomats say.

Critics of the charter slammed that approach in the debate after Merkel's speech, as undemocratic.

"The EU's political establishment is now going full steam ahead to thrust the Constitution upon us," eurosceptical British conservative lawmaker Neil Parish said. "If the leaders of the EU attempt to airbrush out the wishes of the French and Dutch voters, they risk destroying the very institutions they revere." ((Writing by Mark John, editing by Paul Taylor and Stephen Weeks; Reuters Messaging: paul.taylor.reuters.com@reuters.net; +322 2876801))

Keywords: EU MERKEL/

[Reuters/Finance.cz]