Major's party crisis paralyses summit

Cannes meeting: European heads to skirt round monetary union as PM's leadership tussle casts its shadow

The European summit, which opens here today, will be overshadowed by the British political crisis and by deep-rooted uncertainty about how Europe should move ahead on the road to reform.

Jacques Chirac, the French President and host, was fighting last night to ensure that his showpiece summit is not paralysed, insisting that important new programmes can be agreed on such issues as unemployment, crime and trans-European transport.

Jacques Santer, President of the European Commission, who wants Cannes to set an ideological agenda for next year's Inter-Governmental Conference (IGC) on Europe, said heads of government should prove that the Union "is moving forward without hesitation or weakness."

However, Cannes is likely to be seen as a summit where leaders had much to say and little to do. In the midst of a Eurosceptic onslaught at home, the Prime Minister will be unable to enter whole-heartedly into discussion of the dominant issues: monetary union and institutional reform.

Even progress on immediate practical questions such as the setting up of a police data agency, will be hard to achieve, given Mr Major's situation.

Douglas Hurd, who has announced his resignation, is certain to receive accolades in Cannes, but a Foreign Secretary on his way out cannot be expected to play a part in central decisions.

Britain will be hoping that the single currency debate will be played down at Cannes following acceptance by member states that the changeover cannot now begin until 1999.

Mr Major is unlikely to be put under pressure to compromise, officials say. Since he faces a leadership challenge, the principle of ''solidarity'' between EU leaders probably will be applied, allowing him to escape without any embarrassing reversals. Apart from the fraught question of monetary union, a row over new powers for the European Court of Justice is one of the biggest fears for Mr Major at Cannes.

Other countries, particularly Germany, are insisting that the European Court should be able to oversee the working of Europol, the proposed new police information agency. Mr Chirac is determined that fighting crime should be a theme of the summit and wants firm decisions on Europol.

However, allowing the agency to be subject to the European Court rulings is fiercely resisted in London as a new step towards federalism.

Britain is also currently at loggerheads with other EU leaders over whether to commit new funds in aid to African, Caribbean and Pacific countries. France has been seeking a total of $17.3bn in new aid over the next five years.

But Britain argues that such funding should be primarily a bilateral responsibility and should not come out of a European pot.

A larger debate is also dividing the heads of government over whether priority should be given to supporting the EU's Mediterranean neighbours or to countries in Eastern Europe.