EU tiptoes round Lisbon quicksands

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By Laurence Peter BBC News, Brussels

Both Mr Barroso (left) and Mr Brown claimed summit successes

EU leaders will breathe a sigh of relief that the Lisbon Treaty will not - for now at least - get them bogged down in institutional wrangling again.

Irish Prime Minister Brian Cowen appears satisfied that the deal on an EU protocol, as well as a legally binding EU decision, will be enough to reassure Irish voters and deliver a "Yes" to Lisbon in a second referendum. He expects the Republic of Ireland to be ready for the vote in early October.

These EU legal instruments spell out that Lisbon will not affect Irish sovereignty over military neutrality, taxation and anti-abortion policy.

The Irish "No" to Lisbon, just over a year ago, pushed back the timetable for the treaty to take effect, despite years of negotiations.

EU leaders - especially the Swedes, who are poised to assume the EU presidency - want Lisbon because they say the 27-nation bloc's current institutions are creaking under the strain of enlargement.

Opponents say Lisbon is just the defunct EU constitution repackaged and see it as a Trojan horse for EU domination over national authorities.

Barroso eyes new term

The big fear at this summit was that the protocol demanded by the Irish could reopen the whole Lisbon ratification debate.

UK Prime Minister Gordon Brown insists that the additional protocol is Ireland-specific, "doesn't change the relationship between the EU and nation states" and will not affect the Lisbon Treaty itself.

Czech PM Jan Fischer had his country's pride at stake as chairman

The happiest leader at this summit appeared to be Jose Manuel Barroso, the veteran Portuguese politician who got unanimous backing for a new five-year term as European Commission president.

His passion for the European project appears undimmed by the low turnout and lacklustre campaigning that characterised the European elections.

"Europe has to be a cross-party project," he said, all too aware that some parties in the European Parliament are lukewarm or even hostile towards his candidacy.

One of his immediate priorities will be to deliver new legislation on financial supervision, now that EU leaders have agreed on the framework.

Mr Brown says the deal is good for the City of London and "UK taxpayers will be protected".

Avoiding another Iceland

The UK persuaded its EU partners that national authorities should have the final say if a financial firm - be it a bank, insurance company or pension fund - needs rescuing.

The fact that UK taxpayers took a hit when Icelandic banks collapsed convinced the UK government that tighter cross-border supervision was necessary.

But the UK was also anxious to safeguard the City of London's regulatory powers, and to prevent the eurozone muscling in. It appears to have achieved that, with the agreement that European supervisors' decisions "should not impinge in any way on the fiscal responsibilities of member states".

The deal does promise that European supervisors will have "binding and proportionate decision-making powers" to resolve disputes. But it is not yet clear whether their authority would be enough to compel a government to rescue a firm or compensate taxpayers.

The EU was anxious to show leadership on this issue, amid widespread anger that a US bad loans crisis had such a damaging impact on Europe.

There was also the fact that this week the Obama administration unveiled the biggest overhaul of US financial regulation since the 1930s Great Depression.

Turning to international relations, the leaders condemned the Burmese authorities' detention of democracy campaigner Aung San Suu Kyi, in a message timed for her 64th birthday. They warned of "additional targeted measures" if Burma failed to release political prisoners.

There were some tough words for Iran too, with Mr Brown deploring the post-election street violence there and restrictions on free speech.

The Czech Republic, now handing over the EU presidency to Sweden, has had some diplomatic embarrassments this year but this summit went relatively smoothly.