Middle East events cast a shadow over today's EU summit

The shadow of a Middle East war has cast a pall over the opening today of the European Union's summit in this small, Basque coastal…

The shadow of a Middle East war has cast a pall over the opening today of the European Union's summit in this small, Basque coastal resort of southern France. Its focus was supposed to have been internal, the reform of the treaties ahead of enlargement, but the events in Palestine and the EU's response are now certain to stake centre stage.

The developments in Serbia will also take star billing with the announcement today of an immediate aid package of €200 million to Yugoslavia, The Irish Times has learned.

Some of the cash, which is new and additional to regional allocations, will also go to neighbouring states if the reallocation is approved by ministers and MEPs. Tomorrow, the new Serbian President, Dr Vlodislav Kostunica, will join leaders for lunch, he has confirmed.

Meanwhile, the possibility of violent protests by Basque nationalists has led to the deployment of between 1,000 and 1,500 extra police to the district. Demonstrations are planned as well as an "alternative summit".

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Last night, the French Presidency was appealing to the Palestinian authorities to punish those responsible for the deaths of the Israeli soldiers and the Commission was calling for Israeli restraint. Today, leaders are expected to devote their lunchtime discussions to the issue.

The Commission President, Mr Romano Prodi, said he had only one appeal: "Stop the fighting. Never have we been so close to peace as a few weeks ago."

The heads of government will, nevertheless, also be determined to push forward the debate on the treaty-changing Inter-Governmental Conference which is due to conclude in Nice in December. The summit is not expected to produce any breakthrough but to provide leaders with a better sense of what is crucial to each of their partners.

A spokeswoman for the Commission, Ms Laurence Auer, said the key issue was the rolling back of veto voting, the debate that will open the leaders' discussions this morning.

The Commission believed that the real test of its success would be the extension of qualified majority voting to five crucial policy areas: taxation, where it impinged on the internal market; social security policy; commercial policy, particularly the negotiation of international agreements on service; cohesion and structural policies; and immigration and asylum policy.

The list is ambitious, touching on areas of acute sensitivity, not least to Ireland which is not alone in opposing the loss of its veto in taxation. By trying to limit the tax changes to areas affecting the internal market, such as problems of double taxation of workers or cross-border VAT payments, the Commission hopes to make the pill more palatable.

Spain has adamantly opposed majority voting in the field of structural and cohesion policies, fearing that it will not be able to resist attempts to reduce its funding take. The Commission responded by arguing that structural funding was far more vulnerable to a single veto and that Spain and others misunderstood their own interests.