The leaders of current and future EU member states left their two-day meeting in Brussels without making much progress on several key EU issues, such as agreeing on a constitution for the EU or settling their differences over European defense policy.

Absent from the second day of the meetings was German Chancellor Gerhard Schröder, who flew back to Berlin early for a crucial labor-market reform vote. In an unusual move, the German position was represented by French President Jacques Chirac, a sign that relations between the two countries are particularly warm at the moment.

Despite the meager progress on key EU issues, the leaders did signal their support for an economic growth initiative and named a new head of the European Central Bank.

Going in Circles over the Constitution

In the weeks leading up to the summit, experts had predicted that there would be no major breakthroughs on the EU constitution deadlock. The draft constitution -- worked out by representatives from each of the EU's current 15 members and 10 future members at the special Convention on the Future of Europe -- has proven to be one of the EU's most contentious issues.

The document calls for fundamental changes to the EU's current structure and is meant to ensure that the organization continues to function smoothly after next year's enlargement. However, the recommendations were not warmly received by all members.

Smaller states have accused the larger ones -- namely Germany, France, Britain and Italy -- of a power grab, and worry that they will lose influence.

At issue are two key points: the size of the European Commission and voting procedures. Many EU members not among the "big four" would like to retain the current arrangement within the European Commission, with each state allocated one permanent representative. The draft constitution proposes for efficiency's sake trimming the size of the Commission to 15 members, with members rotating in and out.

The document also proposes changing the EU's voting procedures from the current majority voting system to the so-called "double majority" voting system, with the support of half the members of the EU representing 60 percent of the population required to carry a proposal through. Poland and Spain have taken particular issue with this proposal, preferring the current system, wherein each country enjoys weighted voting rights, which gives them influence comparable to Germany, although their populations are smaller.

"We see no possibility of departing from Nice," Polish Prime Minister Leszek Miller told reporters, referring to the Treaty of Nice, which codified the current system.

At the summit, no compromise was reached and old positions were simply restated. This has led some to question whether of not the differences can be worked out by the end of the year, when Italy, the current holder of the EU's rotating presidency, hopes to wrap up negotiations and send a final version of the constitution off for ratification by member states.

"This morning has not taken it all in any way forward," Sweden's Prime Minister Goran Persson told reporters. "It is my assessment....that we will need time also during the Irish presidency (which starts in January). I cannot imagine that this will be ready by December."

All the same, Italian Prime Minister Silvio Berlusconi says he will press on and is optimistic that he can adhere to the December timeline. He suggested he might call a special informal meeting in November to address the remaining differences.

A fight brewing over European defense

The further development of European defense also proved divisive. At a small summit in Brussels last April, Germany, France, Belgium and Luxembourg proposed the creation of a military command headquarters for the EU, separate from NATO. Such a move has raised alarms in Washington.

This idea is also very unpopular with the British Prime Minister Tony Blair, who reaffirmed his support for NATO and the organization's central role as the provider of European security. "Of course we need a stronger European defense initiative," said Blair. "But nothing should endanger the security guarantee provided by NATO."

British and Polish defense experts believe that EU defense capabilities should be developed for use in the event that NATO declines to act in a particular region or during a particular crisis. Others in the EU have more ambitious plans for European defense. Some, in particular France, envision a more independent European defense capability, and along with that, an independent planning facility.

A united front on economic issues

Despite the differences over constitutional and defense matters, the heads of state did manage to reach a consensus on two economic-related matters.

On Friday, they announced a growth initiative aimed at boosting the European economy. The statement cautiously backed a European Commission proposal to aim public investment at cross-border transport, energy and research. The funds diverted to the project would total more than €5 billion ($5.8 million). However, some economists say the initiative will do little to improve the economic situation in Europe and more significant labor market, pension and welfare reforms are needed to breathe new life into the economy.

They also agreed on a new head of the European Central Bank. The French-born Jean-Claude Trichet was officially named, and is scheduled to begin his tenure as the second head of the bank on November 1st. He will replace Dutchman Wim Duisenberg.