By Tony Barber in Brussels

Nicolas Sarkozy and Angela Merkel, the French president and German chancellor, will present fellow European leaders on Thursday with a proposal for a Mediterranean Union that leaves sensitive questions unanswered about how the scheme will operate.

According to a Franco-German document obtained by the Financial Times, the Mediterranean Union will seek to strengthen co-operation among the European Union’s 27 member states and non-EU, mainly Muslim, countries in north Africa and the Middle East.

But the document is vague about what projects the Mediterranean Union will support and how they will be financed, indicating that final agreement is lacking on a subject that has caused much discomfort in Berlin about French intentions.

Mr Sarkozy and Ms Merkel are expected to unveil their initiative at a dinner tonight for EU heads of state and government on the first day of a two-day summit in Brussels.

According to their joint document, the union will give fresh impetus to the so-called Barcelona process, which started in 1995. The existing process is in essence a patchwork of overlapping economic, political and social agreements between the EU and 10 countries on the shores of the Mediterranean, from Morocco to Turkey.

Funds allocated to the Barcelona process can be used for Mediterranean Union projects, the document says. But “additionally and outside the EU budget” other money, including private sector finance, will be available.

Diplomats said this formulation addressed the concerns of Germany and other northern EU countries that, as the EU budget’s biggest contributors, they would pick up the bill for projects managed by an institution over which they might have little or no say.

However, the Franco-German document’s wording leaves it uncertain exactly where funds not originating from the EU budget will come from.

In contrast to France’s original plan to launch the Mediterranean Union at a grand summit on July 13-14, the document foresees a one-day summit of all 27 EU states and non-EU Mediterranean states on July 13.

As for possible Mediterranean Union projects, France distributed a paper to its EU partners in January that suggested initiatives in agriculture, energy, the environment, migration, transport and 10 other areas. None is mentioned in the new Franco-German document.

It says the Mediterranean Union should have a co-presidency, shared at the outset by one non-EU state and one EU state with a Mediterranean coastline. This arrangement will be reviewed later, it states.

When Mr Sarkozy first proposed a Mediterranean Union last year, it was quickly apparent that it was an Elysée palace initiative that lacked enthusiastic support from France’s foreign ministry, deeply committed to the Franco-German relationship.

Ms Merkel disliked suggestions that the Mediterranean Union should be restricted to EU and non-EU countries with Mediterranean coastlines.

She said this risked fragmenting the EU, pushing France towards its former colonies in northern Africa and the Middle East and Germany towards its traditional sphere of influence in eastern Europe.

Other EU countries saw the scheme partly as a re-assertion of France’s influence across the Mediterranean, wielded ever since the French conquest of Algiers in 1830.

Some detected an effort by Mr Sarkozy to block Turkey’s path to EU membership – it has been an official candidate since 2005 – and park the Turks in a different and substantially less European organisation. Turkey says it is now satisfied that this is not the scheme’s intention.