Following the traditional photocall, European Union heads of state and government will retreat to the negotiating table for a fresh round of tough discussions with Greek Prime Minister George Papandreou in Brussels on Thursday.
While the so-called ?Greek problem? is not formally on the meeting?s agenda, it will inevitably be part of the two-day discussions held by European leaders. Topping the list is the release of 12 billion euros in emergency aid to Greece, the fifth tranche of 110 billion euros of EU and International Monetary Fund loans which was agreed in May 2010.
European chiefs of states are expected to express their willingness to deliver their part of the deal, provided that Greece commits itself to economic reform, which includes a new round of austerity measures.
There will also be further talk on a possible second bailout of a similar size to meet Greece?s obligations. According to German Chancellor Angela Merkel, the second package ought to include the voluntary participation of the private sector.
While no formal decisions are going to be reached in Brussels, the proceedings are being closely monitored by international financial markets.
?If there were a failure to resolve that situation, it would pose threats to the European financial system, the global financial system, and to European political unity, I would conjecture, as well,? said US Federal Reserve Chairman Ben Bernanke on Wednesday, Reuters reported.
Meanwhile, more issues on the Brussels summit agenda include the size of the eurozone?s current bailout fund, Europe?s involvement in Libya and Syria, and the EU?s enlargement to include Croatia. Also during the summit, Jean-Claude Trichet will pass the European Central Bank torch onto his successor, Italy?s Mario Draghi.
Greek Premier George Papandreou headed to Brussels having secured a confidence vote back home, but ahead of a decisive vote in Parliament regarding the government?s midterm fiscal plan on June 28. The midterm plan includes further cuts in public spending, tax increases and privatization measures. If the measures are approved by the Greek Parliament, the 12-billion-euro aid package will be released in early July. So far, only one PASOK MP, Alexandros Athanasiadis, has said that he is not going to vote in favor of the midterm plan.
Ahead of the Brussels summit, French President Nicolas Sarkozy congratulated Papandreou on the confidence vote and reiterated France?s support for Gre?ce?s ?courageous and necessary reforms.?
At the same time, Dutch Finance Minister Jan Kees de Jager said that discussions with Dutch banks are under way in view of a voluntary participation in case of a new Greek bailout.
While Papandreou was toughing it out in Brussels, his new Finance Minister Evangelos Venizelos on Thursday was continuing talks in Athens with top EU, ECB and IMF officials, known collectively as the troika. The ministry rebuffed reports according to which European creditors demanded tougher measures to be included in the midterm plan.