French President Emmanuel Macron sought to break a deadlock over the EU's top jobs on Tuesday by proposing France's Christine Lagarde, now head of the International Monetary Fund (IMF), to lead the European Central Bank (ECB), diplomatic sources said.
In his proposal, made to tired EU leaders on a third day of arm-wrestling over who will hold the posts for the next five years, Macron also proposed German Defence Minister Ursula von der Leyen to head the European Commission, the EU executive.
Hungarian Prime Minister Viktor Orban's spokesman said that Hungary, the Czech Republic, Slovakia and Poland supported von der Leyen, who speaks fluent English and French and wants Germany eventually to reach NATO's requirement of spending 2% of its economic output on defence.
The leaders are trying to balance political affiliations, the varying interests of different regions and an acute lack of women in senior ranks as they seek to fill five jobs coming vacant later this year.
Following the French president's proposal, one source said: "Things are going smoothly now."
The marathon talks have underlined the growing fragmentation in the 28-nation European Union, increasingly struggling to agree a common platform on major challenges from migration to trade to climate change.
A diplomatic source said German Chancellor Angela Merkel, the EU's most powerful leader, was "very positive" about the proposal of Lagarde, a former centre-right French finance minister. She is also likely to welcome the proposal of von der Leyen, who is from Merkel's governing conservatives.
Lagarde, an experienced political operator and a persistent advocate of letting more women into top economic jobs, would need to overcome her lack of experience in monetary policymaking if she were to lead the ECB.
Italy and ex-communist eastern states had blocked Dutch socialist Frans Timmermans on Monday from taking up the post of Commission president, the highest-profle job in Brussels.
The Commission supervises EU states' budgets, acts as the bloc's competition watchdog and conducts trade negotiations with outside countries. Its presidency is the key post of the five, who will shape policy for the world's biggest economic bloc and its 500 million people.
The struggle to share out the posts -- which also include the new head of the European Parliament, the bloc's top diplomat and the chairman of EU summits -- has already taken a toll.
The deadlock meant the postponement of a separate meeting on Italy's public finances, and was distracting the EU as a nuclear deal it helped to forge with Iran was edging closer to collapse.
The stalemate in decision-making has also cast fresh doubt on whether the EU can take in new members from the Western Balkans, some of which are being courted by Moscow.
The inability to reach consensus bolsters criticism from anti-establishment nationalists and undermines the EU's image as it faces multiple external challenges -- from the United States, Russia, Iran and China among others.
If Macron's proposal is approved, it would be the first time that a woman has headed either the Commission or the ECB, which steers the economies of the 19 members of the single-currency euro zone.
Because both are centre-right politicians, socialist candidates should then take the post of top EU diplomat and deputy roles at the Commission, diplomats said. Possible names discussed on Tuesday afternoon included Timmermans, Spain's Josep Borrell, Slovakia's Maros Sefcovic and Bulgaria's Sergei Stanishev.
Belgium's caretaker prime minister, Charles Michel, a liberal, could become the next chairman of EU leaders' summits, the sources said. Another liberal, Denmark's Margrethe Vestager, could also get a senior Commission role, they added.
EU leaders have to seal a deal on Tuesday or risk being overtaken by the new European Parliament, which holds an inaugural session after a continent-wide election in May.
It was due to announce the names of candidates vying to become the assembly's new president at 10 p.m. (2000 GMT) on Tuesday before a vote on Wednesday.
The parliament's approval is required for the Commission president that the national leaders nominate.
But two sources signalled that the Macron package was likely to face stiff opposition in the European Parliament as it largely left out the leading candidates - or "Spitzenkandidaten" - proposed by the various political groups in the assembly.
"I expect the negotiations of the heads of government to respect the principle of the Spitzenkandidaten," said German socialist lawmaker Achim Post.
"The post of Commission president is a key position for the future of Europe, not a random position in negotiations between governments to secure a post for a politician."
Italian Prime Minister Giuseppe Conte said he wanted a woman as the next head of the European Commission.
Conte also seemed to edge Italy away from any imminent threat of EU action on its large debt by asserting that its 2019 budget deficit looked set to fall to 2.04% of GDP.
The European Commission, which has threatened to launch disciplinary procedures over Rome's failure to cut public debt, was due to return to the matter on Wednesday.