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Greece woes overshadow EU summit | Greece woes overshadow EU summit |
(40 minutes later) | |
The question of how to contain Greece's debt problems and ease pressure on the euro will weigh heavily on EU leaders when they meet in Brussels later. | The question of how to contain Greece's debt problems and ease pressure on the euro will weigh heavily on EU leaders when they meet in Brussels later. |
The 27 leaders are under pressure to give a clear signal to financial markets that Greece's budget crisis will not destabilise the euro. | The 27 leaders are under pressure to give a clear signal to financial markets that Greece's budget crisis will not destabilise the euro. |
EU rules prevent eurozone members from jointly bailing out Greece. But bilateral help might be forthcoming. | EU rules prevent eurozone members from jointly bailing out Greece. But bilateral help might be forthcoming. |
It is the first big test for European Council President Herman Van Rompuy. | It is the first big test for European Council President Herman Van Rompuy. |
He wants the summit to focus on a new strategy for jobs and growth - a blueprint for the next 10 years. | He wants the summit to focus on a new strategy for jobs and growth - a blueprint for the next 10 years. |
Eurozone contagion fears | Eurozone contagion fears |
The other main agenda items are climate change and help for earthquake-devastated Haiti. | The other main agenda items are climate change and help for earthquake-devastated Haiti. |
We have not asked for help, we have said that we just want you to support our own will George PapandreouGreek Prime Minister Q&A: Greece's economic woes Greek PM pledges to slash deficit | We have not asked for help, we have said that we just want you to support our own will George PapandreouGreek Prime Minister Q&A: Greece's economic woes Greek PM pledges to slash deficit |
Mr Van Rompuy's priorities on climate change include "changing the dynamics of the negotiating process", to put the EU back in the driving seat after the disappointment of Copenhagen in December. | Mr Van Rompuy's priorities on climate change include "changing the dynamics of the negotiating process", to put the EU back in the driving seat after the disappointment of Copenhagen in December. |
In Copenhagen the EU failed to get binding global targets on greenhouse gas emissions, in what was widely seen as a big diplomatic setback. | In Copenhagen the EU failed to get binding global targets on greenhouse gas emissions, in what was widely seen as a big diplomatic setback. |
Mr Van Rompuy has chosen a quiet old wood-panelled library, Bibliotheque Solvay, as the secluded setting for his first summit as EU president. It is just a short walk from the usual EU venue - the modern Justus Lipsius building, which houses hundreds of journalists and delegation officials. | Mr Van Rompuy has chosen a quiet old wood-panelled library, Bibliotheque Solvay, as the secluded setting for his first summit as EU president. It is just a short walk from the usual EU venue - the modern Justus Lipsius building, which houses hundreds of journalists and delegation officials. |
Greece is not even mentioned in Mr Van Rompuy's invitation letter to the EU leaders, but correspondents say it is bound to figure prominently in the day-long discussions. | Greece is not even mentioned in Mr Van Rompuy's invitation letter to the EU leaders, but correspondents say it is bound to figure prominently in the day-long discussions. |
Other eurozone countries with big deficits, such as Portugal and Spain, are seen as vulnerable if Greece's budget crisis is not tackled resolutely. | Other eurozone countries with big deficits, such as Portugal and Spain, are seen as vulnerable if Greece's budget crisis is not tackled resolutely. |
The talks are all the more urgent coming just hours after a public sector strike brought many services to a standstill in Greece. | The talks are all the more urgent coming just hours after a public sector strike brought many services to a standstill in Greece. |
The government's decision to freeze public sector salaries and raise the retirement age are among the austerity measures that have angered Greek trade unions. | The government's decision to freeze public sector salaries and raise the retirement age are among the austerity measures that have angered Greek trade unions. |
Market sensitivities | Market sensitivities |
Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow. | Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow. |
Its debt is about 300bn euros ($419bn; £259bn), and the government estimates it will need to borrow about 53bn euros this year to cover budget shortfalls. | Its debt is about 300bn euros ($419bn; £259bn), and the government estimates it will need to borrow about 53bn euros this year to cover budget shortfalls. |
Greece's economic troubles have sparked mass industrial unrest | Greece's economic troubles have sparked mass industrial unrest |
The markets remain sceptical that Greece will be able to pay its debts, and speculation is rife that the EU is preparing to bail the country out. | The markets remain sceptical that Greece will be able to pay its debts, and speculation is rife that the EU is preparing to bail the country out. |
Analysts say that powerful eurozone members such as Germany may be able to help by buying Greek government debt or by providing loan guarantees. | Analysts say that powerful eurozone members such as Germany may be able to help by buying Greek government debt or by providing loan guarantees. |
In addition, the European Commission may decide to disburse regional aid to Greece earlier than planned. | In addition, the European Commission may decide to disburse regional aid to Greece earlier than planned. |
But EU leaders appear reluctant to call on the International Monetary Fund to shore up the Greek economy. That would be a big blow to pride in the single currency. | But EU leaders appear reluctant to call on the International Monetary Fund to shore up the Greek economy. That would be a big blow to pride in the single currency. |
After talks with French President Nicolas Sarkozy in Paris on Wednesday, Greek Prime Minister George Papandreou said his government would do whatever it took to cut its deficit. | After talks with French President Nicolas Sarkozy in Paris on Wednesday, Greek Prime Minister George Papandreou said his government would do whatever it took to cut its deficit. |
"We have not asked for help," he said. "We have said that we just want you to support our own will, our country's credibility in implementing this programme." | "We have not asked for help," he said. "We have said that we just want you to support our own will, our country's credibility in implementing this programme." |
The BBC's economics correspondent Andrew Walker says a default by any of the high-deficit eurozone countries would hit banks in Europe which hold government debt. | The BBC's economics correspondent Andrew Walker says a default by any of the high-deficit eurozone countries would hit banks in Europe which hold government debt. |
The risk is that the contagion could hurt European exports and even trigger a rapid decline in the euro's value, if international investors took fright and tried to shift their assets into other currencies, our correspondent says. | The risk is that the contagion could hurt European exports and even trigger a rapid decline in the euro's value, if international investors took fright and tried to shift their assets into other currencies, our correspondent says. |
So far the decline of the euro has been substantial - about 9% since early December - but not disorderly, he says. | So far the decline of the euro has been substantial - about 9% since early December - but not disorderly, he says. |
The European Commission is working on the blueprint for the EU's new economic strategy, called Europe 2020, which is expected by early March. | The European Commission is working on the blueprint for the EU's new economic strategy, called Europe 2020, which is expected by early March. |
It will replace the Lisbon Strategy, launched in 2000, which became a victim of the global financial crisis and of fiscal rule-breaking by EU governments. | It will replace the Lisbon Strategy, launched in 2000, which became a victim of the global financial crisis and of fiscal rule-breaking by EU governments. |
Mr Van Rompuy is reported to favour tighter EU co-ordination of economic policy and enhanced EU surveillance of member states' budgets. |