The warning by Schroeder, who is holding the rotating chairmanship of EU, came as the unexpected resignation of the European Commission (EC) last week and the diplomatic failure in Kosovo cast a shadow over the two-day summit in Berlin, threatening to push out the long overdue reforms of the EU's annual $100 billion budget from the agenda.

The summit, which was originally convened to give the final political clearance of the Agenda 2000 (budget plans from 2000 to 2006), was told that the EC's resignation in the face of a scathing report on corruption, fraud and nepotism made it ``even more urgent to conclude agenda to save the EU, in the eyes of the public at least, from a deep crisis''.

European farm and finance ministers have been workingovertime to slam out a draft agreement on the Agenda 2000 package in time for this week's summit.

The summit will also define procedures for the nomination of a new EC and possibly a new president to replace Jacques Santer.

Former Italian premier Romano Prodi appears to be a front-runner after securing the backing of France, Germany, Italy, Spain and Britain for the top job in EU's executive.

The resignation of the 20 commissioners responsible for EU policy on everything from trade and agriculture to competition and the environment, threw the EU into its worst institutional crisis, just as it was moving towards fundamental reforms on coordination.