Ireland remains determined to defend its right to set its own tax rates, the Taoiseach last night told the French EU presidency.
Tensions mounted as the French suspended the meeting of the full summit to organise a series of bilateral meetings with every member state in an effort to prise real bottom-line positions from each of the leaders on the reform of the EU treaties.
"We have stated our position very clearly that there is a fundamental aspect of national sovereignty involved in taxation," Mr Ahern said, following Ireland's meeting with the presidency. "We do not believe that any tax matter can or should be imposed by qualified majority voting." Diplomatic sources said the meeting, which lasted about a quarter of a an hour, was intense.
Earlier, the French Prime Minister, Mr Lionel Jospin, described Thursday night's leaders' dinner debate on treaty reform as "useful" and reflecting "a clear wish to conclude" the summit's business. However, few differences were bridged.
After lunch yesterday, the meeting broke up for "confessionals" - bilateral meetings between the French presidency and the heads of each national delegation. If all goes according to the extraordinarily optimistic schedule sketched out by President Chirac, the French will draft a synthesis compromise paper overnight for approval by leaders this morning.
They could then hold concluding press conferences this afternoon. Few, however, share such optimism.
That pessimism was confirmed by the news that the French had rejected the Commission President, Mr Romano Prodi's offer to assist by joining the "confessionals" process. Last night the Commission was holding its own series of separate informal "confessionals".
Diplomatic sources suggested the French may regret not having an impartial witness to vouch for their analysis of member state positions, and will find a package more difficult to sell.
Following the first of the bilaterals, Swedish sources were saying they thought another full round of talks would be inevitable today. And Germany's Foreign Minister, Mr Joschka Fischer, warned against regarding this morning's French draft as final. Ireland's concerns have been whittled down to a handful. The Taoiseach still insists there can be no movement on the Irish veto right on taxation decisions and on provisions for harmonising social dialogue in industry.
Ireland can live with the loss of over 30 other vetos, diplomatic sources say.
Controversial provisions to allow sub-groups of member-states to set up common defence projects within the EU framework are now certain to be defeated.
And, although there have been hints at an Irish eventual willingness to concede in principle a future ceiling on the size of the Commission, and hence on Ireland's automatic right to a commissioner, five other small countries are still holding out. with us.
A senior Commission source predicted agreement on a future review of the Commission size, but without prejudice to the issue of whether to cap it.
Most observers last night agreed each member-state will continue to appoint a member of the Commission, although the Commission's structure will be reviewed without prejudice at a later date.
"For the time being, we will fulfil the demand of one commissioner per member-state, although a really expanded EU needs a limit on the number of commissioners," a German official said.
The leaders appeared to have agreed to allow groups of member-states to co-operate more closely on most issues, but not on defence and foreign policy. Any such group would need to attract at least eight member-states, including three larger states and four smaller ones.
Much of today's wrangling is likely to centre on the question of extending qualified majority voting to most decision-making areas.
Keep up to date with events at the EU summit in Nice on breaking news at www.ireland.com/breaking