( Reuters ) - European Union leaders will sign the 'Treaty of Lisbon' on Thursday to modernize the bloc's institutions and put behind them a difficult reform process that has lasted nearly a decade.
The signing will start a ratification process by national EU parliaments that leaders hope will avoid the 2005 "No" by French and Dutch voters to the proposed EU constitution, which preceded the treaty in trying to reform EU institutions.
Portuguese Foreign Minister Luis Amado warned in an interview on Thursday that failure to ratify the treaty would create a crisis in Europe.
"We would have a political crisis in Europe, a serious one, worse than the one we've already been through," Amado told the Spanish daily ABC.
The treaty is a toned down version of the constitution and EU leaders hope it will be effective in adapting the bloc's structures to its new size of 27 members, after it opened its doors to 12 mostly ex-communist states in 2004 and 2007.
The pact aims to create a more effective foreign policy, stronger leadership and more democratic decision-making.
"This is the treaty that was possible, that accommodates as far as possible the different expectations, sensibilities and perspectives for the development of the European project," Amado said. "The citizens of Europe feel Europe should be stronger and this treaty will help bring that about."
The Dutch and French rejections of the constitution in 2005 started a long period of soul searching for the Union as it showed the citizens of two founding EU members did not share politicians' ambitions for a more federal Europe.
This time around, only Ireland is planning a referendum, reducing the risks of an upset, even though polls suggest many Irish voters are undecided or indifferent.
The bloc's rotating presidencies will end with the new treaty and be replaced in 2009 with a long-term president of the European Council, who will chair summits. The treaty will also establish a stronger foreign policy chief.
It will allow more decisions to be taken by majority voting, notably on justice and security issues, and give more say to the European and national parliaments.
"This is the foundation for a new European Union in the 21st century," said German Chancellor Angela Merkel.
Treaty negotiations began during Germany's EU presidency in the first half of 2007 and finished under Portugal's.
In streamlining decision-making and ending a drawn-out process, officials hope the treaty can allow the EU to turn to more important things, such as job creation and facing up to the challenges of globalization.
The treaty signing at noon will take place in the cloister of Lisbon's Jeronimos Monastery, a symbol of Portugal's power in the 15th and 16th centuries. The government has raised banners with European flags across Lisbon and the words 'Treaty of Lisbon' written in different European languages.
All EU leaders will sign the treaty, though British Prime Minister Gordon Brown will arrive late after appearing before a parliamentary committee in London, and will sign it later.