The leaders, holding two days of talks in Brussels, agreed on a need to boost ties with the region, but baulked at creating a new, potentially costly, structure on which to base the partnership. "The project received wide support," said Slovenian Prime Minister Janez Jansa, whose country holds the EU’s rotating presidency. "It is now a question of working on this in different forums. It’s now a question of doing what is needed so that this project can see the light of day," he said.    

French President Nicolas Sarkozy raised the plan during last years election campaign. He once suggested such a union might be the best place for Turkey, whose EU membership he staunchly opposes. But Germany feared that France would try to use the project as a counter to Berlins growing influence in central Europe as the EU expands, by limiting the club to southern European countries. "Tomorrow morning, the decision will be formally taken to transform the Barcelona Process into a Union for the Mediterranean. That was decided unanimously tonight," Sarkozy said at a separate press conference. But he conceded: "A compromise had to be found with the EU countries not in the region, and I perfectly understand that they wanted to feel involved."

Launched in 1995 as a framework for political, economic and social ties, the so-called Barcelona Process has regularly been thwarted in its aims by confrontations between Israel and Arab countries. Almost a dozen countries are involved: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Territories, Syria, Tunisia and Turkey. Mauritania joined last year, while Libya has observer status. "It’s not a question of burying it, to start from scratch. It’s just about bringing it up to date," Jansa said. "Times have changed, we have to adapt."

Earlier, Jansa had warned against setting up "parallel institutions", and he and others underlined the need for all EU countries and those in the region to be fully implicated. "Clearly this is something that would need to involve all European Union member states," said a spokesman for British Prime Minister Gordon Brown. Luxembourg Prime Minister Jean-Claude Juncker said: "What’s important is that all the EU member countries take part in an equitable way in this undertaking."

The details of the plan have yet to be fleshed out. A document circulated among Frances EU partners in Brussels this week said that it would have "the role of promoting cooperation in a regional dimension, to develop solidarity" between those taking part. Yet despite Sarkozy’s willingness to compromise, German Chancellor Angela Merkel has not decided whether to attend a July 13 summit in Paris on the project, with southern partners present, just after France takes over the EU’s rotating presidency. But Merkel acknowledged Thursday that the Barcelona Process "was slowing down and needed to be revitalised. It needs to be politically more significant and better supported by the member states."

Apart from doubling up, some EU countries are also worried about how the project would be financed. Since a unanimous vote would be required for any EU funds to be used, one objection could block it.

The two-day summit is also focusing on environment policy amid fears that Europe’s tactics to cut greenhouse gas emissions might just export jobs and pollution abroad. The leaders are also discussing the turmoil on the world’s financial markets, with the aim of boosting confidence as the dollar plunges and oil prices sky-rocket.