Downing Street will back creation of EU president

Britain is ready to agree to a "historic compromise" that would lay down a European Union constitution with a new president, says Peter Hain, the cabinet minister who is negotiating the future of the EU on behalf of Tony Blair.

After a crucial debate in Brussels yesterday, Mr Hain predicted that a convention chaired by the former French president Valéry Giscard d'Estaing would bury its public differences to reach a deal on a series of far-reaching changes.

And he turned against the Eurosceptic newspapers that have accused Mr Blair of backing a constitution that will produce "tyranny" and end a thousand years of history, describing their reporting as "hogwash" and "a complete figment of fantasy".

For the authors of the new constitution the clock is now ticking because their work has to be presented to EU leaders, who have the final word, in five weeks' time. While yesterday saw a succession of protests about M. Giscard's plan for a full-time president of the European Council, where EU governments meet, the convention's big players believe that a compromise is in the making. As one senior figure put it: "The mayonnaise is starting to gel."

The final package is expected to satisfy the central demand of the EU's big states by creating the new president of the European Council. In exchange small countries will keep the right to send a commissioner to Brussels, rather than having the size of the Commission trimmed, which they fear could diminish their influence. Mr Hain said Britain would agree to the creation of an EU "foreign minister" – combining two existing posts in one member of the European Commission – if there were safeguards to ensure foreign policy remained the preserve of national governments.

Mr Hain argued: "What I see is a big contrast between negotiating positions that are being struck in public from what I know to be the case in private." He said that "virtually every small country tells me in private, 'We know we have to do a deal.' " He added: "What we have here is a historic compromise initiated by the French and Germans [who agreed a joint position] in January which is still pregnant and not born."

There were other signs that the 105-strong convention was edging towards compromise. The Benelux countries, which have been staunch opponents of the idea of a council president, now say they are willing to accept the plan under certain conditions.

Nevertheless the council presidency idea remains highly contentious, presenting a problem for M. Giscard, who needs to achieve a consensus to give his proposals political force.

Johannes Voggenhuber, an Austrian parliamentarian, said M. Giscard "has got to start accepting that there is a huge, overwhelming majority against a full-time president".

Finland's government representative, Teija Tilikainen, said the plan "would deprive the EU of one of its cornerstones of equality".

Denmark's parliamentary representative, Henrik Dam Kristensen, argued that "the smaller countries will run the risk of being marginalised".

George Papandreou, the Greek Foreign Minister, called for the EU president to be directly elected.

Andrew Duff, a Liberal Democrat convention member, tabled proposals to merge the presidencies of the European Commission and the European Council.