Europe's flagship anti-terrorism policy – a plan for a fast-track EU arrest warrant – was in disarray after Italy blocked the measure, despite winning concessions.
The move deals a blow to EU credibility as heads of government had demanded agreement on the high-profile initiative by yesterday's meeting of justice and home affairs ministers.
After hours of horse-trading, talks collapsed when the Italian government of Prime Minister Silvio Berlusconi insisted on the need to minimise the scope of the measures. This raises the prospect of a fierce political battle over the issue at next week's EU heads of government summit at Laeken, near Brussels, with Mr Berlusconi facing isolation among his fellow leaders.
Formally, the government in Rome says the arrest warrant, which would end extradition proceedings for many crimes within the EU, should concentrate on terrorism and similarly serious offences.
But diplomats have speculated that the real motive is a desire to exclude a host of crimes, including financial misdemeanours and corruption, from the scope of the proposal. Mr Berlusconi has been linked to a series of financial scandals and his government recently failed to ratify an agreement with Switzerland which would have speeded inquiries into crimes such as money-laundering.
The Italians suggested yesterday that the list of 30 categories of offence covered by the arrest warrant should be reduced to just six. The move was rejected by the Belgian presidency of the EU which warned that Mr Berlusconi faces a summit embarrassment next week.
Other EU nations, including Britain, were openly critical. Angela Eagle, a Home Office minister, said: "I don't understand the reasons for Italian reluctance. They have not explained themselves very well. They tried to tear the list apart". Ms Eagle said she regarded the Italian move as "a wrecking amendment" but added she was optimistic that agreement could be reached by the end of the Laeken summit.
EU officials were particularly frustrated because a final compromise even offered member states the option of exempting any crime committed before a specific date, which could have been as late as 2004.
Under the proposals, countries would be obliged to hand over suspects within 60 days, or 10 days for those who agreed to be transferred. Although presented, originally, as a measure against terrorism the proposal was then extended to cover many types of crime.Reuse content