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Czech citizens' approval of European Union membership fell in the first half of this year, suggests a new national survey prepared for Eurobarometer. In the second half of 2006, 51 percent of respondents in the twice-annual poll said EU membership was a good thing; however, that figure fell to 46 percent this year - the first time that rating has dropped below the 50 percent mark in a Eurobarometer poll. As for what worries Czechs, the health service was regarded as the biggest problem - almost 40 percent said it was a concern, twice as many as the EU average.

The European Union has criticised the Czech Republic over the state of its public finances. EU finance ministers called on Prague to tighten its budget policy in order to reduce the public finance deficit to below three percent - and as quickly as possible. This year the Czech Republic's budget deficit is set to reach 4 percent of gross domestic product, breaking a Czech government pledge to keep it below 3.3 percent. Tuesday's reprimand had been expected and is set to be followed by a similar admonishment later this year.

Meanwhile, Czech Finance Minister Miroslav Kalousek said the EU had given its backing to government plans to reform the Czech Republic's welfare and taxation systems.

The Czech cabinet originally planned to further specify the political priorities of the Czech EU presidency by the end of June, but has put off the debate indefinitely as it wants to see how the current Portuguese presidency will develop, Ondrej Karas of the Office of Government said on Wednesday. Mr. Karas told the CTK news agency that the cabinet also wants to wait for the autumn negotiations with France and Sweden, Prague's predecessor and successor at the EU helm, respectively. The three countries are planning to create a joint programme for a period of 18 months.

The main motto of the Czech presidency is to be Europe Without Barriers. Prague also wants to focus on the EU s competitiveness and deregulation, and to emphasize the freedom of movement of people, services, capital and goods within a liberal trade policy.

In Business News: the government has distributed 700 million crowns to finance EU presidency preparations, Czech companies are hoping to contribute to the modernisation of Bulgaria's railways, the Czech power giant CEZ is hoping to become a strategic partner in a Romanian power plant modernisation project, roughly one in three Czechs are working in the industrial sector, a new poll suggests that three in four entrepreneurs has to deal with corruption.

The European Commission is going to extend until 2010 an exemption under which construction work in the Czech Republic is in the lower, five-percent value added tax bracket, the Czech Press Agency reported. The exemption had been due to come to an end in January, and there were fears of a subsequent rise in house prices. The EC is due to officially announce the news next week.

Against all the odds, leaders of the European Union emerged from the weekend's summit with an agreement to draw up a new treaty to govern the 27-member bloc. The "reform treaty", as it is to be called, will replace the moribund EU constitution, rejected by French and Dutch voters in 2005. Czech leaders have hailed what they see as the death and burial of the constitution as a great success, but the new document encapsulates many if not most of the constitution's original features. So was the summit really a triumph for the Czech Republic? We spoke

Czech politicians are mostly pleased with the result of the EU summit which came to an end in Brussels on Saturday. According to the executive council of the strongest political party, the Civic Democrats, a reform process has been launched that will lead the EU to a truly functioning system of European integration. Civic Democrat MEP Jan Zahradil called the result a turning point from the concept of the creation of a European superstate and European federalism.

European Union leaders clinched agreement on a reform treaty by the end of this year, to be ratified by mid-2009, replacing the EU constitution rejected in 2005 by French and Dutch voters. The new text features neither constitutional nor state symbols and the EU will have a high representative for foreign policy, not a foreign minister. The summit also approved the possible transfer of powers back to member countries, a system of "dual flexibility" that Prague has been supporting.

The EU is gearing up for a crucial summit this week. It starts Thursday and is scheduled to end Friday, but could well go on longer, as Europe's leaders try to hammer out the outlines of a treaty on how to run the organisation. As its presidency draws to a close, Germany has been pushing for some kind of revival of the constitution rejected by voters in France and the Netherlands. Other states, including the Czech Republic, are demanding a considerably more limited treaty. Meanwhile, the Czech Republic is the only member supporting Poland, which

Alexandr Vondra, a Czech deputy prime minister, says Prague continues to support Poland's fight to hold on to its current voting rights within the European Union. The Czech Republic is the only state openly backing Poland, which has threatened to veto any treaty on the running of the EU at a key conference later this week if it does not get its way. However, Mr Vondra qualified support for Warsaw, saying the voting rights issue was not a Czech priority.

Mr Vondra said he expected the summit to last longer than the planned two days. But he said he thought compromise on a treaty would be reached, adding that there was "no plan B".

The Czech Republic is pushing for the return of some powers from Brussels to member states, and has sent a proposal to fellow members aimed at increasing the powers of national parliaments. However, it stopped short of proposing that national governments be allowed to completely block European legislation.

The Czech prime minister, Mirek Topolanek, has said he believes a key European Union summit next week will reach agreement on the outlines of a new treaty on running the 27-member organisation. Speaking after talks near Berlin on Sunday with the German chancellor, Angela Merkel, Mr Topolanek said Prague would only veto efforts to revive the same constitution French and Dutch voters rejected two years ago.

The Czech prime minister also restated his country's desire to see some powers returned from Brussels to member states. On Thursday the Czech Republic sent a proposal to fellow member states aimed at increasing the powers of national parliaments. However, it stopped short of proposing that national governments be allowed to completely block European legislation.

Czech leaders have consistently expressed reservations about any EU constitution. Prague is also supporting Poland's fight to prevent bigger states losing some voting rights.