Bush, EU leaders emphasize unity on Iran, China

WASHINGTON (Reuters) - U.S. President George W. Bush and European Union leaders emphasized unity on pressuring Iran to give up nuclear ambitions and China to lower trade barriers at a summit on Monday overshadowed by a crisis within the EU.

Bush met at the White House with European Commission President Jose Manuel Barroso; Luxembourg Prime Minister Jean-Claude Juncker, president of the rotating European Council; and EU foreign policy chief Javier Solana.

Their talks came against a backdrop of a crisis in the European Union over its failure to agree on a long-term budget and to ratify a constitution to give the world's biggest trading bloc greater solidarity.

The EU leaders told Bush that despite the disarray, the bloc's governing apparatus is functioning and "not at its knees," Juncker said at a joint news conference with Bush, Barroso and Solana.

"It's no surprise that in this process some problems may occur, but the European Union is there," Barroso added. "We are on business. We are deciding. We are taking decisions every day internally and externally, and we are committed to this very close relation with the United States."

Bush told them the United States supports a strong European Union. "My message to these leaders and these friends was that we want a Europe strong so we can work together to achieve important objectives and important goals," he said.

To that end, Bush made clear there was no differences in position on Iran, which the United States suspects wants to develop a civilian nuclear power program in order to ultimately have nuclear weapons, a charge Tehran dies.

Britain, France and Germany have offered economic incentives to Iran if it will forswear nuclear ambitions, and Washington supports those negotiations.

Bush said he and the EU leaders talked about Iran and he thanked them "for sending a clear message to the leadership in Iran that we're not going to tolerate the development of a nuclear weapon."

FLEXIBLE EXCHANGE RATE

On China, Bush said he and the leaders agreed that China should move to a more flexible exchange rate in order to level the trade playing field and allow more foreign imports into its economy.

Washington wants China to drop its long-time practice of pegging its currency at 8.28 yuan to the dollar.

The United States and the EU have the world's largest trading relationship, which currently totals more than $1 billion a day, and they took steps to boost those ties.

They pledged to work on reducing regulatory barriers that increase the cost of doing business across the Atlantic and to step up their fight against fake and pirated products, which now account for 7-9 percent of world trade.

Relations between the EU and the United States has improved markedly in recent months, EU External Relations Commissioner Benita Ferrero-Waldner told reporters.

Disputes over the Iraq war had raised tensions between the United States and many EU members.

"We are now in much better shape in terms of our relationship. Since President Bush's visit in February, many positive results have come up," Ferrero-Waldner said.

With a donors conference for Iraq scheduled on Wednesday in Brussels, Bush insisted that progress was being made toward stability there despite insurgent attacks.

He is under pressure to show progress in Iraq, with concern among Americans about rising U.S. casualties and no end-game in sight.

To the families of U.S. troops in Iraq, Bush said, "I want those families to know, one, we're not going to leave them -- not going to allow their mission to go in vain; and two, we will complete the mission and the world will be better off for it."