10/03/05 09:53 ET

LUXEMBOURG, Oct 3 (Reuters) - The United States intervened on Monday
to try to rescue membership talks between the European Union and
Turkey as a diplomatic deadlock deepened hours before the historic
negotiations were due to open.

EU president Britain said the 25-nation bloc was "on the edge of
a precipice" after Turkish objections to a clause it fears could
affect NATO membership piled on top of Austrian demands that the
Muslim nation be offered an alternative short of full membership.

U.S. Secretary of State Condoleezza Rice telephoned Turkish Prime
Minister Tayyip Erdogan to assure him that the proposed EU negotiating
framework would not impinge on NATO, diplomats said.

A presidency spokesman said Britain still hoped to hold the opening
ceremony on Monday but it would clearly be later than the planned 5
p.m. (1500 GMT) start.

Turkish Foreign Minister Abdullah Gul was waiting nervously in Ankara
for the EU to adopt a negotiating mandate before he could set off
for Luxembourg.

British Foreign Secretary Jack Straw telephoned Austrian Chancellor
Wolfgang Schuessel to try to clinch agreement on a formula to satisfy
Austrian concerns that the EU may not be able to absorb the vast,
poor, Muslim country, diplomats said.

The United States had also contacted Vienna to try to overcome
objections fuelled by overwhelming public hostility to Turkish
membership, they said.

Turkish financial markets yo-yoed amid the uncertainty. Stocks fell
some 2.3 percent from Friday's close and the lira was down nearly 2
percent against the dollar, but both recovered in mid-afternoon amid
hopes the problems would be resolved.

Rice's involvement was potentially embarrassing for the EU,
highlighting its inability to solve its problems alone.


Straw told the 24 other EU foreign ministers upon resuming talks
after only a couple of hours' sleep: "Yes, we are near (to a deal)
but we are also on the edge of a precipice.

"If we go the right way we reach the sunny uplands. If we go the
wrong way, it could be catastrophic for the European Union."

In Ankara, Prime Minister Tayyip Erdogan told a meeting of the ruling
AK party that Turkey was not prepared to compromise further on the
conditions for opening the long-awaited talks.

"Those in the EU who cannot digest Turkey being in the EU are against
the alliance of civilisations. What I declare is this: the costs
resulting from all this will be paid by them."

Turkey has frequently portrayed its entry to the EU as a way of
bridging a gap between the Christian and Islamic worlds and easing
tensions that may have fostered islamic militancy.

Diplomats said Ankara had objected to a clause in the EU negotiating
mandate that stipulates it may not block accession of EU states to
international organisations and treaties.

Turkish nationalists and the powerful military argued that might
prevent Turkey blocking a divided Cyprus from joining NATO. Cyprus
refused to let the EU change the wording.

But diplomats said Straw and EU foreign policy chief Javier Solana
hoped to assuage Ankara with a letter clarifying that the clause did
not impinge on sovereign defence arrangements.


As the clock ticked down, German Foreign Minister Joschka Fischer
told ministers: "Time is running out. We have got to get this right.

We seem so close. We cannot let this opportunity slip away."

Failure to start the talks could deal a blow to political reform and
foreign investment in Turkey, a strategic country of 72 million people
straddling Europe and the Middle East.

It would also deepen a sense of crisis in Europe, after referendum
defeats for the draft EU constitution in France and the Netherlands,
and an acrimonious failure in June to agree on a long-term budget
for the enlarged bloc.

"If there is no deal, my personal judgement is that we are increasingly
starting to look like a Union of failing states because we cannot make
any decisions," Latvian Foreign Minister Artis Pabriks told Reuters.

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

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."

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.

Several hundred Armenians staged a noisy demonstration outside the
EU meeting, demanding that Turkey be forced to make amends for what
they called the Armenian genocide.