Brussels - The European Union flirted with chaos Monday as top diplomats complained about a "cliquey" response to the recession and failed to agree on the use of community funds to aid economic recovery.

"I must admit I'm extremely worried about the EU's institutional chaos. Never in the EU's history has there been a period like this with so many cliques," Finnish Foreign Minister Alexander Stubb said after regular talks in Brussels with his EU counterparts.

Monday's meeting of foreign ministers came just six days before an emergency summit of EU leaders, called by the bloc's Czech presidency to address growing concerns about the spread of protectionist responses to the economic crisis within the bloc.

The announcement of the March 1 summit had come shortly after French President Nicolas Sarkozy infuriated Prague by suggesting that its car makers should move their production back from Central Europe.

Addressing media reports of a damaging rift between one of the EU's most powerful members and the current EU presidency, French Foreign Minister Bernard Kouchner and Czech Foreign Minister Karel Schwarzenberg announced they would now be holding regular talks with each other.

"We were sometimes very surprised to discover in the press that we were in a bad mood, Karel and I. This is not true at all," said Kouchner.

"So we decided to see each other, or at least to talk to each other twice a week ... on all the subjects," the two ministers said ahead of the start of Monday's meeting.

But any calls for harmony were short-lived, however, with Stubb soon leading a chorus of complaints against a separate meeting in Berlin of the bloc's six richest members
- Britain, France, Germany, Italy, the Netherlands and Spain.

Sunday's meeting in the German capital was designed to forge a common EU response to the global financial crisis ahead of a G20 summit in London on April 2.

But it was criticized by smaller EU member states, with Sweden's Carl Bildt saying "six to eight" EU countries had complained about being left out of the decision-making loop.

The rebel group included Sweden, Poland, Belgium, Luxembourg and Poland.

"I can't understand what was gained by Sunday's meeting in Berlin. This confusion is not only undermining small EU member states and the (European) commission, but the council (of all 27 EU members) itself," the Swedish foreign minister said.

Poland has itself called for Central and Eastern European members to meet ahead of Sunday's EU summit over concerns that eurozone countries were dictating the agenda on how to counter the global economic and financial crisis.

And in a setback for European Commission President Jose Manuel Barroso, foreign ministers also failed to make headway on his proposal to devote 5 billion euros (6.3 billion dollars) of community funds to high-tech projects to help kickstart the EU economy.

Ministers agreed that the money should not come out of the EU's budget for 2008, as had been originally proposed by the EU's executive, but failed to agree on alternative sources of funding, diplomatic sources said.

Barroso in November proposed a 5-billion-euro cash injection for projects linking the energy grids of isolated member states and boosting high-speed internet access in rural areas. Part of the money would also be used to boost alternative sources of energy.

But EU members have since fallen out both over the list of energy projects which the commission has identified, and its plan to look for the money among the EU's unspent funds, which would normally be returned to national governments.

The commission's subsequently revised list of projects was Monday criticized by several member states. Spain, Portugal, Austria, Bulgaria and Greece were among those lamenting that too much money was being devoted to projects affecting Northern and Eastern European nations.

Germany, which pays the largest sums into the EU budget, has also been particularly critical of the package.

German Foreign Minister Frank-Walter Steinmeier on Monday denied blocking any progress, insisting however that "discussions" were still needed.

The Czech presidency acknowledged that problems remained, but expressed optimism that a deal could be reached in time for the EU's regular spring summit of March
19-20.

The divisions witnessed in Brussels on Monday highlighted the EU's difficulties in remaining united as it struggles to deal with its worst economic downturn in decades. (dpa)