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UK, Germany try to heal wounds left by EU treaty veto

Source: Thomson Reuters Foundation - Mon, 19 Dec 2011 00:31 GMT
Author: Reuters
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* German Foreign Minister in London for talks on euro, foreign policy

* Talks were agreed after divisive EU summit

* Syria, Iran also on the agenda

By Adrian Croft

LONDON, Dec 19 (Reuters) - German Foreign Minister Guido Westerwelle meets British ministers on Monday for talks on the euro zone debt crisis and world trouble spots, in a sign both powers want to heal the wounds opened by Britain's veto of a new European Union treaty.

Westerwelle will hold talks in London with Foreign Secretary William Hague and Deputy Prime Minister Nick Clegg.

"The talks will mostly be about Europe, but also about international themes such as the worrying situation in Syria and the Iranian nuclear programme," Germany's Foreign Ministry said.

Diplomatic sources said Westerwelle's meeting with Hague was agreed after the Dec. 8-9 EU summit in Brussels when Britain refused to join the other 26 countries in a fiscal union.

The talks are being held at Germany's request, suggesting Berlin wants to hold out an olive branch to non-euro zone member Britain by showing it remains a key EU partner on foreign policy and other issues despite staying out of the new pact.

A German diplomatic source said Westerwelle's talks, expected to be followed by a news conference with Hague, would focus on "the euro, the question of how the EU should proceed further (to tackle the crisis), what should be done."

"We should not expect anything dramatic but it's quite helpful to keep open the dialogue. It's important to have Britain as a partner," the source said.

Prime Minister David Cameron's veto dashed German Chancellor Angela Merkel's hopes of tightening budget discipline through a revised EU treaty, leaving EU states with the alternative of an inter-governmental treaty -- France's favoured option.

Clegg, leader of the pro-European Liberal Democrats, junior partner in Britain's Conservative-led coalition government, has said he was "bitterly disappointed" by the summit outcome and has pledged to work to build bridges with Britain's EU partners.

TAX FIGHT

Germany and Britain, respectively the EU's biggest and number three economies, have also clashed over a proposed financial transactions tax and over the role the European Central Bank could play in resolving the euro zone crisis.

Britain rejects German calls for a transaction tax, fearing it would damage London as a global financial centre. Britain believes the ECB should act as lender of last resort to tackle the euro zone crisis, an idea ruled out by Merkel.

Britain and France have clashed over their economic performance in the wake of the summit, with Clegg telling French Prime Minister Francois Fillon on Friday criticism of the British economy was unacceptable.

Merkel has been more conciliatory, saying London would remain a crucial EU partner.

Britain will be allowed to follow discussions on the new "fiscal compact" as an observer, a move that the German diplomatic source said was in Berlin's interest.

Britain initially signalled it could oppose any steps to use the European Commission and the European Court of Justice to enforce the new pact. But Clegg told Saturday's Guardian newspaper London would not try to stop other EU countries from using the bloc's institutions.

Hague and Westerwelle are expected to discuss President Bashar al-Assad's repression of protests in Syria, the Iranian nuclear issue and the war in Afghanistan, as well as Libya, Egypt, the Balkans and wider EU issues.

Britain and Germany are both members of the United Nations Security Council at the moment -- Britain with a permanent seat and Germany in the middle of a two-year elected term.

Both British and German diplomats at the U.N. have said a new, beefed-up draft resolution on Syria presented to the Security Council by Russia last week does not go far enough.

EU foreign ministers will discuss new sanctions on Iran's financial, transport and energy sectors -- possibly including an embargo on imports of Iranian oil -- when they meet in January.

The West suspects Iran of developing a nuclear weapon, but Tehran insists its nuclear programme its peaceful. (Additional reporting by Keith Weir in London and Sarah Marsh in Berlin)

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