The EU on Friday adopted plans for an independent military planning cell inspired by Britain, France and Germany that EU leaders said would finally win over a suspicious US and NATO.
But Washington stopped short of giving its blessing, saying it was looking carefully at the plans announced at an EU summit while reiterating the pivotal role it assigns to NATO for Europe's defense.
The EU plans to set up "early as possible in 2004" a unit linking a few dozen military officers, who would be responsible for planning and carrying out operations that NATO would prefer to stay out of.
The unit will be based with the EU's existing military staff in Brussels. A separate EU unit attached to SHAPE, the military headquarters of NATO in Mons, Belgium, would also be made permanent.
British Prime Minister Tony Blair hailed the initiative.
"This gives us the opportunity to keep the transatlantic American alliance very strong, but making sure that in circumstances where America is not engaged in an operation, and where vital European interests are involved, that Europe can act," Blair told reporters.
"That's exactly what we wanted, and doing it in a way that's completely consistent with NATO as the cornerstone of our alliance," he said.
French President Jacques Chirac said the landmark pact was a "not insignificant move towards strengthening European defense".
German Foreign Minister Joschka Fischer said he was confident that Washington's concerns had been addressed.
"It is a very good step forward that makes clear that we are not operating against NATO but rather as a supplement, reinforcing the European [military] pillar," he told reporters.
"On this basis, we can and will relieve concerns on the other side of the Atlantic."
The US had reacted sharply against proposals for a fully fledged EU military staff headquarters put forward in April by France, Germany, Belgium and Luxembourg -- which all campaigned against the US-led war on Iraq.
The proposals were later watered down so they were acceptable to Britain, which is the EU's main military heavyweight alongside France, and to the United States.
NATO secretary general George Robertson said on Thursday the 19-nation military alliance could accept the revised EU defense plans and was confident the United States would extend its blessing.
But US State Department spokesman Richard Boucher reacted with caution late Friday.
"The United States has always placed the great importance on the pre-eminence of NATO in matters of transatlantic security," he told reporters.
"We have full confidence that our European allies will carry out these arrangements and they can develop this initiative in a way that does protect NATO's role as the premier European security organization and that reinforces transparency and close cooperation between NATO and the European Union," he said.
EU leaders also agreed at the summit to consider lifting an arms embargo imposed on China after it crushed pro-democracy demonstrations in 1989.
"Thanks to a proposal by the French president [Jacques Chirac], we asked the foreign affairs council to review the question of the embargo on selling arms to China," Italian Prime Minister Silvio Berlusconi told a news conference.
EU diplomats said the leaders of France, Germany and Britain all spoke in favour of ending the ban in what one called "a remarkably consensual discussion" in which even Sweden, a stickler for human rights, supported the review.
But some states were wary about moving too fast. Signalling there was no backing away from its core values, the bloc made a fresh call on Beijing to improve its respect for human rights and political and religious freedoms.
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