Dutch raise stability pact in Naples

Dutch State Secretary for Europe, Atzo Nicolai, said that he did not want to go over the actual decision again but wanted to discuss its implications.

Trust in Europe and among member states has been severely damaged, he said and went on to call for budgetary discipline to be anchored in the Constitution.

Germany and France escaped fines from the Commission following an acrimonious meeting of ministers in Brussels on Monday - despite having broken the stability pact which underpins the euro.

The Italian Presidency, which in fact sided with France and Germany, on the stability pact issue, said the whole issue may be discussed in the evening.

Later Italian Foreign Minister Franco Frattini decisions taken by finance ministers earlier this week "should not encroach" on the Constitution talks.

Countries such as Austria were also against the issue being linked to the Constitution.

No solutions on the tricky issues

Spain, whose main fight is not to see a reduction in its voting weight in the council of ministers in the future Constitution, is expected to get great political mileage out of the stability pact decision.

Ana de Palacio, Spain's foreign minister complained to the Italian Presidency about the fact that it had offered no compromise solutions on the tricky issue of vote weighting in a future EU.

Austria's Benita Ferrero Waldner also expressed regret that the Presidency has not provided a solution on the institutional questions saying it was a "great great shame".

She remained optimistic that a deal will eventually be reached during the December Summit in two weeks time - a deadline set by the Italian Presidency.

Characterising today's meeting in Naples as a chance to "clear up", Ms Ferrero Waldner said there is a very good chance of reaching a deal so long as all are ready to compromise.

For the moment there are no signs of that. The Polish Europe Minister, Danuta Hubner, said that Warsaw is "still trying to convince ... colleagues" on the issue of vote weighting.

This afternoon ministers are set to discuss justice and home affairs, social policies and religion in the Constitution.

This evening, over dinner, they will discuss European security and defence.

However, as one EU diplomat conceded, "nothing is expected to be decided, they are trying to clear the way for an agreement later".