The European Commission President Mr Romano Prodi has warned Britain and the United States that the EU might oppose any planned military action against Iraq.
On the final day of the EU summit in Barcelona, EU leaders also reaffirmed their support for the creation of an independent Palestinian state alongside Israel. They said they would send monitors to the occupied territories in the West Bank and Gaza Strip in an effort to stop the fighting.
Mr Prodi said US President George Bush and Mr Tony Blair still need to convince the EU that fresh action against Saddam Hussein is justified.
Although Mr Prodi said that Iraq had not featured on the formal summit agenda, he made clear that there were deep misgivings about the prospect of military intervention against Saddam.
"I am worried about future possible American action in Iraq and the necessity for explanations and knowledge on the deep reasons for that."
Britain has insisted that Iraq's programme to acquire an arsenal of nuclear, chemical and biological weapons must be addressed.
Earlier today, EU leaders clinched a deal to break France's state electricity monopoly in what had become a test case for free-market economic reforms.
Outside the meeting, thousands of Spanish police were braced for anti-capitalist protests. But there was no sign of trouble as leaders of the 15 states prepared to leave.
The main business of the EU summit had been to revive a plan, launched at Lisbon two years ago, to open up European markets and strip away regulation in areas ranging from transport and energy to job security with the ambitious goal of outstripping US economic competitiveness by 2010.
Since then little progress had been made as breaking up state monopolies proved to be an electoral hot potato for some states, notably in France and Germany, which hold elections this year.
But this morning, under intense pressure, Paris agreed to a partial opening of its energy market that will by 2004 let French businesses, but not domestic consumers, buy their power from private competitors to state-owned Electricite de France.
According to the draft conclusions, the EU leaders will also pave the way for tougher sanctions on President Robert Mugabe and send a high-level team to talk with Zimbabwe's neighbours.
The 15 government heads will also throw their weight behind the bloc's executive body as it takes action against US steel tariffs through the World Trade Organisation.