Catch-up summit in Lisbon to patch up EU-US ties

(BRUSSELS) - After a stinging last-minute cancellation of an EU-US summit six months ago, President Barack Obama meets the bloc's new leadership Saturday in Lisbon to patch up ties strained by the economic crisis.

The world's two largest trading blocs are far from seeing eye-to-eye on ways to speed recovery for their 800 million people, and the European Union flies in to the talks saddled with fresh woes in Ireland, the second member state after Greece to face a financial bailout this year.

Not surprisingly, economic issues will top the talks as the transatlantic partners -- with an annual two-way flow of over four trillion dollars in trade and investment -- look for ways to stimulate the global economy and generate jobs.

"A strong Europe is a stronger partner for the United States," said the Obama administration's Liz Sherwood-Randall, senior director for European affairs, on the eve of the talks.

Also on the table are ways to enhance counter-terrorism in the wake of recent threats in Europe, including a cyber-security initiative, and joint policies on climate change and aid to developing nations.

As the world's leading donors, accounting for 80 percent of aid, Brussels and Washington aim to maximise cooperation to get greater value for money spent.

"We're hopeful there'll be a number of concrete goals that come out of this," said US ambassador to the European Union, William Kennard, ahead of the November 20 summit.

Just back from a long Asian tour, Obama's face-to-face with EU leaders will be a brief encounter of two hours held on the back of a major agenda-setting NATO summit, also being held in the Portuguese capital.

The "agenda is robust, but time is exceedingly short," commented analyst Heather A. Conley of the Center for Strategic and International Studies.

"Economic issues have become even more prominent in transatlantic relations, yet President Obama is spending less than two hours on US-EU economic matters amidst a significant European economic crisis with major consequences for the United States and other countries."

With the two sides divided on currency -- notably a recent injection of 600 billion dollars which Europe says hurts the euro -- as well as trade where Germany enjoys a good trade surplus "there are great challenges", Conley added.

Obama's sudden decision to call off a tete-a-tete with the EU last May raised a whirl of fears across the 27-nation bloc of being sidelined by Washington in favour of emerging powers such as China.

That fear was fuelled too by Washington's position at the failed Copenhagen climate talks last December when it chose to deal with Beijing rather than Brussels -- another issue likely to be raised in Lisbon ahead of next month's Cancun Conference.

Sweeping aside such negativity, ambassador Kennard said "we have a deep and intense relationship day to day. On all major foreign policy issues we are engaged with Europe."

"You don't test a relationship on face-time, that's not appropriate."

Saturday's encounter will be Obama's first with the new EU leadership born out of the union's Lisbon Treaty, which came into force last December and changes the way the bloc works, notably by giving the directly-elected parliament a far stronger role.

Facing Obama for the first time will be EU president Herman Van Rompuy, who joins European Commission president Jose Manuel Barroso at the summit table.

"I think they'll get on," said Kennard, describing both as "thoughtful" and "analytical".

Van Rompuy, said anaylst Conley, "is a skilled behind-the-scenes player".

Also attending will be US Secretary of State Hillary Clinton and the EU's new foreign policy chief Catherine Ashton, the British baronness representing world powers in talks on Iran's contentious nuclear programme.