By Marie-Louise Moller and Mark John

Oct 3 2005

LUXEMBOURG (Reuters) - European Union foreign ministers resumed a
war of nerves over terms for the historic start of membership talks
with Turkey on Monday, hours before accession negotiations were due
to begin.

Austria has plunged the launch of the accession process for the vast,
poor, overwhelmingly Muslim country into doubt by demanding Turkey
be offered an alternative to full membership.

British Foreign Secretary Jack Straw, arriving to chair a second day
of talks after only a couple of hours' sleep, said he was not certain
the negotiations would begin at all on Monday.

"I cannot say for certain that we will be able to make progress,"
he told reporters.

"It's a matter of if -- if we can reach agreement in these discussions
with Austria," he added before going into a private meeting with
Austrian Foreign Minister Ursula Plassnik.

Turkish financial markets weakened on the uncertainty in Luxembourg,
with the main share index down 1.5 percent and the lira down almost
1 percent against the dollar. There was no sense of panic, though
failure of talks could deal a longer term blow to political reform
and foreign investment in Turkey.

A British official said that meeting made some progress towards
finding a formula that could win consensus among the 25 EU member
states, but there was still work to be done.

With Turkish Foreign Minister Abdullah Gul cooling his heels in Ankara
awaiting an EU agreement on the negotiating mandate, the planned 5
p.m. (1500 GMT) opening ceremony seemed likely to be delayed.

Several ministers arriving for the talks sounded gloomy. Denmark's
Per Stig Moeller said: "It's a big problem."

Asked how serious the damage would be to the EU if there were
no agreement on Monday, Dutch Foreign Minister Bernard Bot said:
"It would certainly be a bad day. But we've had similar crises before.

We've found solutions before and we'll find one for Turkey."


Ratcheting up pressure on Austria, Straw postponed a planned review
of Austrian neighbour Croatia's progress towards EU entry talks until
the Turkey issue was sorted out.

"It is a frustrating situation, but I hope and pray that we may be
able to reach agreement," Straw told a post-midnight news conference
after five hours of wrangling with Austria.

A Turkish official said nerves in Ankara were "extremely stretched
.. Every minute that passes is making things more bitter and it.

won't be nice starting negotiations with all these bruises."

With Austrian voters overwhelmingly hostile to Turkish entry, Plassnik
waged a lone battle on Sunday night demanding that the EU spell out
an alternative to full membership.

Diplomats said the 24 other members insisted they could not make
any change to the central principle that the shared objective of the
negotiations would be accession.

"Isolation and pressure is never going to work in politics. It's not
going to work inside the European Union, certainly not. The Union
should have and must have a different style," Plassnik told reporters
in the early hours of Monday.

Asked whether Austria was prepared to veto the start of talks, she
said it took all 25 member states to agree.


Outgoing German Foreign Minister Joschka Fischer warned his colleagues
that Turkey might walk away if the EU watered down the terms on offer
any further.

"If you want to open negotiations, you have to remember we have to
have someone to open them with," a diplomat quoted him as telling
the meeting.

The EU has already irked Ankara by demanding that it recognise Cyprus
soon and open its ports and airports to traffic from the divided
Mediterranean island.

The European Parliament compounded Turkish irritation last week by
saying Turkey must recognise the 1915 killings of Armenians under
Ottoman rule as an act of genocide before it can join the wealthy
European family.

EU diplomats had hoped Austria would ease its stance after

regional elections in Styria province on Sunday. Chancellor Wolfgang
Schuessel's People's Party lost power there for the first time since
1945 despite his brinkmanship on Turkey.

Schuessel has informally linked the Turkish issue to a demand that
the EU open accession talks immediately with Austria's largely Roman
Catholic neighbour, Croatia.

But those talks have been frozen until Zagreb satisfies U.N. war
crimes prosecutor Carla del Ponte that it is cooperating fully in