Europe's leaders near deadlock on top EU jobs carve-up

BRUSSELS (Reuters) - European Union leaders were close to deadlock on Wednesday on sharing out a package of top jobs in the bloc, including a new foreign policy chief, and looked likely to postpone the decision until late August, diplomats said.

The 28 leaders did agree to step up sanctions against Russia over separatist violence in eastern Ukraine shortly after Washington also tightened the screw.

German Chancellor Angela Merkel said Moscow had failed to fulfil commitments to restore peace in the region. The EU will expand sanctions against Russia to target companies that help to undermine Ukrainian sovereignty and will ask the EU's bank, the European Investment Bank, and the European Bank for Reconstruction and Development to suspend new lending.

Former Luxembourg prime minister Jean-Claude Juncker has already been approved as president-elect of the executive European Commission.

The allocation of several other top EU posts, including the president of the European Council of EU leaders, will shape Europe's response to economic stagnation, the crisis in Ukraine and Britain's wavering membership of the bloc.

But the leaders stumbled over growing resistance to Italy's candidate for EU foreign policy chief and demands by central and east European countries that one of their nominees should get a top job.

"There will be no agreement tonight on jobs," one diplomat following the talks said. "There will probably be a new meeting of the European Council in August."

Italian Foreign Minister Federica Mogherini, 41, began the day as front-runner for the foreign policy post but Poland and Baltic states voiced misgivings about her inexperience and attitude to Russia since its annexation of Crimea in March.

Lithuanian President Dalia Grybauskaite told reporters: "I will support a person with experience in foreign affairs and a person who is neutral and at least reflects all opinions of all member states on the conflict between Russia and Ukraine and I will not support a person who is pro-Kremlin."

That irked Italian Prime Minister Matteo Renzi, who said on arrival: "This is not about questioning one position or another, it's questioning the respect that is due to all member states, and in particular to a founding member."

INSURANCE AGAINST FAILURE

Danish Prime Minister Helle Thorning-Schmidt, 47, arrived at the meeting with broad support to take the European Council job, chairing the bloc's regular summits, but France had reservations because her country is not a member of the euro zone.

Thorning-Schmidt said on arrival at the summit that she was not a candidate. Diplomats said that was mainly to insure herself back home against the risk of failure.

Some diplomats said French President Francois Hollande might accept her if France's candidate was assured of the key economic and monetary affairs commissioner's job, which supervises national budgets.

However, Germany is not keen to see former Finance Minister Pierre Moscovici in that role because Paris is still off track to bring its deficit down to the EU limit.

Polish Foreign Minister Radoslaw Sikorski and Bulgaria's Kristalina Georgieva, the EU commissioner for development, are possible alternatives for the foreign policy job if Mogherini stumbles. Some west Europeans see Oxford-educated Sikorski, a respected strategic thinker, as too belligerent toward Moscow.

Georgieva, 60, spent 17 years at the World Bank as an economist and has few political enemies but little foreign policy experience.

Outgoing President Herman Van Rompuy, whose term expires at the end of November, delayed the start of the summit to allow for more consultations to try to put together a package deal but aides said he was floundering. Some leaders said further talks would be necessary in the coming weeks over jobs that include an influential full-time chairman of euro zone finance ministers for five years, likely to go to conservative Spanish Finance Minister Luis De Guindos.

"It's quite possible that this will be only a first discussion and that final decisions won't be taken today," Merkel said on arrival.

The jobs selection is delicate given the wide disparity of views across the 28 countries in the EU, an uneasy alliance spanning Britain, where some Eurosceptics want to quit the bloc, to Greece, which narrowly avoided leaving due to economic turmoil.

The other key posts at the Commission, which proposes and enforces laws for 500 million Europeans, include the commissioners in charge of economic affairs, competition, trade, the internal market and energy policy. "We need to find the right balance between political parties, between north and south, between male and female. A lot needs to be taken into account, but the most important thing is competence," New Finnish Prime Minister Alexander Stubb said. The centre-right Juncker, who won an investiture vote in the European Parliament on Tuesday, attended the summit and will compose his Commission team from candidates put forward by national governments.

Both Mogherini and Thorning-Schmidt are women from the centre-left, which may play to their advantage. But both are from western Europe, and the leaders were under strong pressure to offer one of the top jobs to an east European.

Juncker is seeking to put more women in top jobs. European Parliament President Martin Schulz warned the leaders that the new team would be unlikely to win a vote of confidence in the EU legislature if it contained fewer than the nine women in the outgoing Commission.

Britain may struggle to secure an important position for its nominee, little-known lawmaker Jonathan Hill, as Prime Minister David Cameron tries to renegotiate EU membership terms before a promised 2017 referendum on whether to stay in the bloc.

Britain may be satisfied if Thorning-Schmidt, who has good ties to Cameron, gets the European Council job. Other possible contenders are the former premiers of Baltic euro zone nations Estonia and Latvia, Andrus Ansip and Valdis Dombrovskis.

(Additional reporting by Barbara Lewis, Robin Emmott, Francesco Guarascio, Jan Strupczewski, Martin Santa and Adrian Croft. Editing by Mike Peacock)

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