It's all OK!

Austrian Chancellor Wolfgang Schuessel

The exhausted heads of state and government burst into applause as the deal was struck at 0430 local time (0330 GMT) after an 18-hour session.

The agreement came after hours of wrangling over how much say each member state should have in decision making.

President Chirac: Summit will go down in history

The big countries, as expected, gained influence in the Council of Ministers, the main decision-making body in the European Union.

President Chirac of France said the five-day summit would go down in history for its complexity and as a great success.

The British Prime Minister, Tony Blair, said it had been a very difficult and complicated negotiation.

"This is a big day for Europe", said Swedish Prime Minister Goran Persson. "We are ready for enlargement."

Rebellion

But that provoked a rebellion by the small states and successive concessions had to be made until Portugal and finally Belgium fell into line.

The Portuguese Prime Minister, Antonio Guterres, who had been the most critical, said after the deal that it had deepened the union and created a better Europe for enlargement.

Smaller countries had been concerned that their power would diminish as the EU expands to include countries from Central and Eastern Europe.

The UK insisted on a veto over taxation and social security

Belgium Prime Minister Guy Verhofstadt was arguing that it was unfair to expect Belgium to accept one less vote than the Netherlands, on the grounds that the latter had 50% more people, while Germany had the same number of votes as France, despite having 40% more population.

But Belgium finally agreed to accept the new voting plan, without any further concessions.

Midnight hour

The French plan calls for a double majority for decision-making in the EU's Council of Ministers - one based on individual votes, and a second calculated according to national populations.

New voting allocation

France, Germany, Italy, UK : 29 Spain: 27 Netherlands: 13 Belgium, Greece, Portugal: 12 Sweden, Austria: 10 Denmark, Finland, Ireland: 7 Luxembourg: 4

France, Germany, Italy and the United Kingdom will each have 29 votes - one vote less than originally planned - while several smaller countries have gained an extra vote from the original draft.

The second provision requires decisions to gain the backing of countries representing at least 74.6% of the EU's population.

Previously this threshold had been 62%, which had led to complaints from smaller countries that Germany acting with only two other states could push votes through by virtue of its large population.

The reforms are considered to be crucial as the 15-nation bloc prepares for enlargement, with a dozen countries expected to join over the next decade.

Majority voting

On Sunday, EU leaders managed to reach an "agreement in principle" on a shorter list of policy areas subject to national vetoes at EU ministerial meetings.

The leaders agreed on how to extend majority voting to trade in services while allowing France to retain its veto on cultural and audio-visual services. Diplomats said it would allow France to continue protecting its film industry from Hollywood.

The UK also won a victory with an agreement that majority voting would not apply to taxation and social security, UK and EU officials said.

Although no firm target date was set for expansion, and countries can only join after meeting tough EU economic and political terms, the EU leaders said they hoped to open the doors before the June 2004 European Parliament elections.

All applicants have introduced painful economic reforms to qualify to join the EU but still face tough negotiations on sensitive issues like farming and the free movement of workers.

EU officials say that while the Nice accord removed some of the uncertainty for candidates, the difficulties leaders had in overhauling the EU's creaking structures showed how complicated expansion will be.