EU leaders guarded on watered-down "Club Med" plan

By Ingrid Melander and Paul Taylor

BRUSSELS (Reuters) - European Union leaders gave a guarded welcome on Thursday to a watered-down version of French President Nicolas Sarkozy's grand design for a Mediterranean Union to boost ties with the bloc's southern neighbours.

Sarkozy and German Chancellor Angela Merkel were to present the plan to a 27-nation EU summit on Thursday evening after months of fierce resistance by Berlin forced Paris to drop the most controversial features.

The concept has shrunk from an international forum grouping only states around the Mediterranean, with nine new agencies and a bank, to a mere regular summit of EU and Mediterranean basin countries with a joint presidency and a small secretariat.

Merkel said the original plan would have split the EU and siphoned off common funds for the benefit of a few members and their former colonies.

European Commission President Jose Manuel Barroso applauded the idea, now it is clear that it will involve all EU countries and not divide Europe between north and south.

"We have said from the beginning it was a very good idea to have more commitment of the European Union regarding the Mediterranean," he said.

"At the same time, it is important that all member states of the EU are engaged in it. So it seems now the conditions are there to move forward."

Others were less enthusiastic.