Heads of state and government from the 27 EU nations and an arc of countries from north Africa to the Balkans -- representing some 756 million people -- will inaugurate the new forum at the Grand Palais on Paris' Champs Elysees.

"The goal of the summit," Sarkozy said, "is that we learn how to love each other in the Mediterranean, instead of continuing to hate and wage war."

"It doesn't mean that all of the problems are resolved of course," he said, following talks between Israeli Prime Minister Ehud Olmert and Palestinian president Mahmud Abbas on the sidelines of the summit.

The meeting will see Syrian President Bashar al-Assad return to the international stage, but while he will sit at the same table as Olmert no talks between them are planned.

It is also providing a venue for France to step up its Middle East diplomacy.

"We have never been as close to an accord as we are today," Olmert told reporters after his talks with Abbas, in the presence of the French leader.

French Foreign Minister Bernard Kouchner recognised that the region was fraught with tensions and economic disparities but he nevertheless hailed "a time of hope" for Middle East peace.

"A new wind of dialogue is blowing around the Mediterranean," he said.

Through his energetic lobbying, Sarkozy scored a major coup by getting almost everyone to the venue, although their attendance will not be enshrined in any family photograph, due to objections.

Libyan leader Moamer Kadhafi is boycotting the meeting, while Jordan's King Abdullah II and King Mohammed VI of Morocco are sending senior representatives.

Ahead of the summit, Sarkozy met Turkish Prime Minister Recep Tayyip Erdogan who agreed to attend despite Ankara's reservations about the union in the face of France's opposition to Turkey's EU membership.

To sidestep differences between Israel and its Arab neighbours, the new forum will concentrate on a series of modest regional projects such as cleaning up pollution in the Mediterranean sea or developing solar energy.

The union aims to build on the EU's 13-year-old Barcelona process, which was plagued by disputes between Israel and its Arab neighbours.

"The world is not going to be changed by the meeting today," Swedish Foreign Minister Carl Bildt told reporters. "But the entire region will, hopefully, be changed over time by this particular approach."

Drawing up a final declaration has proved difficult, with references in a draft version to the fight against weapons of mass destruction likely to be chopped out.

On the eve of the summit, signs emerged that regional differences could rear their heads, with the Arab League saying the new forum must not ignore the plight of the Palestinians.

Some partners are reluctant to take part in projects with Israel.

Most emphasis in the draft text is on raising the public profile of the forum, by setting up a joint presidency -- with France and Egypt set to take the first turn -- and organising summits every two years.

A secretariat will also be created to supervise the projects, but its composition, size and location are not to be decided before November.

The summit, starting at 1330 GMT, will be held at the glass-domed Grand Palais that was built for the Paris Exhibition in 1900.

PHOTO CAPTION:

Nicolas Sarkozy (left) and Recep Tayyip Erdogan