(Wraps in earlier Sarkozy comments, adds background)

By Emmanuel Jarry

TANGIER, Morocco, Oct 23 (Reuters) - French President Nicolas Sarkozy on Tuesday invited heads of state and government from around the Mediterranean to meet in France next year to launch his project for a regional union.

In a landmark speech in the port city of Tangier during a state visit to Morocco, Sarkozy called on litteral countries to look beyond past failures and build a new Mediterranean Union that would heal cultural divisions, end religious strife and narrow a glaring north-south wealth gap.

Similar efforts in the past have been held back by political stagnation, weak trade ties and animosity among southern Mediterranean states.

"I invite all the heads of state and government of countries bordering the Mediterranean to meet in France in June 2008 to lay the foundations of a political, economic and cultural union founded on the principles of strict equality," Sarkozy said.

He indicated that the body would be different from the European Union but that the EU Commission could be associated with its activities to ensure they complement one another.

North African economies have underperformed other developing regions of the world, fuelling poverty and religious extremism and leaving an army of young people with few options beside illegal migration to Europe.

This year has seen a spate of suicide bombings in Algeria and Morocco, and an increasingly well-organised radical Islamist movement threatens to use north Africa as a springboard for attacks on western Europe.

"It is no longer the time to talk but to act," Sarkozy said. "In the Mediterranean will be decided whether or not civilisations and religions will wage the most terrible of wars ... whether or not the North and the South will clash."

OBSTACLES ABOUND

Sarkozy's project could supersede the faltering Barcelona Process, which aimed to boost cooperation among Mediterranean countries and create a free trade area by 2010, a goal that now looks unreachable.

Spain tried to stage a Euro-Mediterranean summit in Barcelona in 2005 but most Arab leaders stayed away and analysts said Sarkozy would need to muster all his diplomatic skills to revive a process littered with obstacles.

Sarkozy has won support from states such as Spain and Morocco, but the Arab-Israeli conflict rumbles on in the east and Turkey has resisted the Mediterranean project, its sights still set on joining the European Union.

The French leader has repeatedly said the vast, relatively poor and mainly Muslim nation has no place in the EU, and has instead offered it a central role in the Mediterranean project.

Morocco's support is tempered by concern the new structure could undermine its existing EU accords and status as a star pupil among the bloc's neighbours.

The country of 33 million lacks the lucrative oil reserves of neighbouring Algeria and has pushed hard for EU funding.

It applied for EU membership as far back as 1987 and wants to position itself as a trade and manufacturing hub on the crossroads of Europe and Africa.

"Partnership with the European Union has helped Morocco make decisive progress," Sarkozy said earlier in a speech to the Moroccan parliament in Rabat. "I will do my best to ensure Morocco remains the top beneficiary of EU aid."

He said he hoped Morocco would play a "leading role" in a Mediterranean Union.

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