NEWS

Papademos in Brussels for ultimate crisis management talks

Prime Minister Lucas Papademos will make his European Union leaders summit debut in Brussels on Thursday, as the 27-nation bloc?s leaders gather to discuss ways to overcome the escalating economic crisis.

Papademos?s agenda includes a meeting with European Council President Herman Van Rompuy on Thursday afternoon, followed by an informal dinner of members of the European Council on the same day.

The Greek government has so far remained silent on the issues up for discussion in Brussels but sources Wednesday suggested that Papademos and his team would favor the line being taken by EU officials, including Van Rompuy.

German Chancellor Angela Merkel and French President Nicolas Sarkozy want eurozone states in particular to agree to greater budget discipline so that all countries are committed to keeping their public deficit to below 3 percent of gross domestic product and debt to beneath 60 percent of GDP. They believe that this should be achieved through changes to the EU treaty.

?The current crisis has mercilessly uncovered the deficiencies in the construction of economic and monetary union,? they wrote in a joint letter to Van Rompuy. ?We need more binding, and more ambitious rules and commitments for the euro-area member states… We propose that those new rules and commitments should be enshrined in the European treaties.?

Van Rompuy proposes avoiding a treaty change and modifying instead by tweaking Protocol 12, which relates to eurozone members running up budget deficits that exceed 3 percent of GDP. The European Council president also proposes changes to the stability and growth pact.

While any agreement in Brussels could have serious consequences for the euro, Greece?s main focus will be on progressing with its negotiations over private sector involvement (PSI) in its next bailout. Negotiations with private bondholders about a haircut appear to have stalled. Athens is also keen to see what, if any, progress there will be on talks regarding the strengthening of the European Financial Stability Facility, which will also be discussed in Brussels.

Besides focusing on the economic crisis amid mounting international market pressure, the summit is also set to deal with enlargement issues ?- an accession treaty is scheduled to be signed with Croatia on Friday, while Ukrainian and Turkish ties with the EU are also expected to be discussed.

The Brussel summit also marks 20 years since the draft of the Maastricht Treaty by the European Council, which created the European Union and led to the development of the union?s single currency.