Europe News

Greek tragedy overshadows Van Rompuy's first summit (Roundup)

Feb 9, 2010, 16:32 GMT

Demonstrators prepare to burn an EU flag in central Athens, Greece, during a strike of the public sector on 10 February 2010. EPA/SIMELA PANTZARTZI

Brussels - The disastrous state of Greece's public finances and the danger of its undermining the euro as a whole looked set to overshadow the European Union's forthcoming summit on Thursday as the bloc's new president prepared for his inaugural meeting.

Herman Van Rompuy called the informal summit, his first, to focus on long-term economic strategy, but the Greek problem was expected to dominate proceedings after a top figure said Tuesday that it could have a damaging impact on other EU states.

There is a 'serious risk' that Greece's budget problems will make it harder for other EU countries to keep financing their own deficits, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.

Those expectations were stoked by the announcement that the head of the European Central Bank, Jean-Claude Trichet, was set to attend the summit alongside Van Rompuy and the EU's 27 national leaders.

Trichet has no say over broad EU economic policy, but as the bloc's top banker, his input is crucial to any debate on the euro.

'I fear this summit will be dominated by the financial difficulties faced by certain members of the eurozone,' the head of the European Parliament's socialist group, Martin Schulz, said.

Greece has been facing enormous financing difficulties since the autumn, when the newly-elected socialist government announced that its centre-right predecessor had massively understated its budget deficit.

In recent weeks, fears have spread in international markets that other euro members - notably Portugal and Spain - may face similar financing difficulties, undermining the value of the euro.

EU member states have so far maintained that they will not bail Greece out, a stance echoed by the EU's financial arm, the European Investment Bank (EIB), in a statement on Tuesday.

'The EIB's mission and statute do not allow for bail-outs in terms of budget deficits or balance-of-payments support to individual member states,' EIB President Philippe Maystadt said.

But Almunia stressed that Greece would not need to seek a bail-out from the International Monetary Fund (IMF), saying that the EU was capable of dealing with any crisis.

'We don't need to call on the IMF. We can do it ourselves and we will do it ourselves,' he said.

Van Rompuy in his invitation letter to EU leaders said that debate over lunch would focus on 'some aspects of the present economic situation' - a phrase widely seen as meaning the Greek issue.

But he scheduled, as the key topic of the day, a debate on how to make the EU's economy more competitive and faster-growing.

'Our structural growth rate is too low to create new jobs and to sustain our social systems. To increase it, we have to invest in our productive base and address bottlenecks hampering growth,' he wrote in a summit briefing paper seen by the German Press Agency dpa.

The summit is expected to launch four months of debate on a common set of EU economic targets for the year 2020.

Van Rompuy wrote that the key to success would be to set a handful of goals on crucial issues such as university education and investment into research, and stick to them.

Controversially, he called for those proposals to be not just closely coordinated between member states, but overseen by them, with one country checking another - something which national capitals are likely to resist.

'Missions with experts from the (European) Commission (the EU's executive) and other member states should review the implementation of national programmes,' he wrote.

In a separate paper, he called for a seven-step programme to put the plan into effect.

The steps are: setting a few key targets; removing barriers to higher growth, such as excess regulation; strengthening EU and national economic strategies; keeping a closer eye on their implementation; improving coordination between eurozone countries; giving EU summits a stronger role; and doing a better job of representing the EU position in international groups such as the G20.

Thursday's summit is also scheduled to discuss climate change and the EU's reaction to the earthquake in Haiti.