Brussels - Most of the money given by the European Union to member states is well spent, though problems remain when it comes to payments designed to boost employment, EU officials said Monday.

Officials in Brussels said the bloc's annual audit debunked the "myth" that EU spending is either mismanaged or riddled with fraud.

It found that more than 98 per cent of direct payments made in 2007 to farmers or on administrative expenditure was error free.

Other budget areas such as research grants and humanitarian aid also registered errors of less than 5 per cent.

However, spending in so-called structural funds - money designed to boost employment in the EU's poorest regions - remains a problem.

Brussels - The European Union's decision to re-open talks on a strategic treaty with Russia even though its key demand has not been fulfilled may smack of diplomatic defeat, but it is a victory of pragmatism over principle, analysts said Monday.

"It's a question of how the EU could have more leverage in pressuring Russia to meet its interests. Suspending talks is unlikely to have an impact, dialogue is more likely 

Moscow - Russia welcomed the EU's decision Monday to re-start partnership talks frozen over Russia's war with Georgia in August.

"We have long been ready to re-start talks," an official with the government headed by Vladimir Putin said on condition of anonymity as Russia has not officially been informed.

EU leaders suspended talks on a new accord that governs its relations with the EU in protest of Russia's occupation of Georgia.

Paris - The French presidency of the European Union on Monday firmly criticized Israel's demolition of Arab-owned houses in East Jerusalem.

"The European Union expresses its deep concern about the operations of destruction of Palestinian houses carried out in recent days by Israeli authorities in several quarters of East Jerusalem," a spokesman for the French Foreign Ministry said in a statement.

Brussels - The European Union is to re-start talks on a strategic treaty with Russia which it froze after Russia's August war with Georgia, EU foreign ministers meeting in Brussels agreed Monday according to diplomatic sources.

EU leaders had frozen talks in protest at Russia's occupation of Georgia, demanding that it pull its troops back to pre-conflict lines. Russia has since made a partial but incomplete withdrawal.

Brussels - The European Union is to re