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Recession-hit Europe bids to turn debt crisis corner

Update: March, 01/2012 - 12:32

BRUSSELS – Europe's leaders seek to turn the corner on the debt crisis on Thursday by mapping out new routes to grow their economies just as a eurozone-wide recession kicks in.

After two years in which government debt, bailouts and austerity became bywords for European Union summits, the latest two-day meet starting 6:00pm (1700 GMT) sees the EU move to secure jobs.

"I'm sure you will agree, a little less drama will do no-one any harm," said the head of the EU executive, Jose Manuel Barroso, after a pre-summit number-crunching session in Brussels with Greek premier Lucas Papademos on Wednesday.

A treaty designed to ensure there will be no repeat of the massive debts that felled Greece, Ireland and Portugal will be signed on Friday morning, after EU president Herman Van Rompuy is given a new 30-month mandate.

An EU future for Serbia, a deepening clash with neighbouring Belarus and efforts to break a United Nations deadlock on Syria will all vie for attention, although worries over Spain's weak public finances could drag leaders back to familiar ground.

However, with competing ideas for how to re-engineer economic growth down on the table, and a damning critique of action to implement existing EU strategies, the summit marks a change of emphasis.

Leaders at summits "have over recent months given their full attention to financial stability and budgetary consolidation," said one of the newest EU leaders, Belgium's Socialist Prime Minister Elio Di Rupo.

Having slashed his country's budget in ending an 18-month political crisis,, he said the focus has to be on creating and saving jobs with at least six months of recession in store for the eurozone, according to the EU's own forecasters.

But there are, Di Rupo said, "very different" ideas on how to achieve this goal, with half of the bloc signing up to a demand for new goals including a fresh focus on trade with the United States, Russia and China.

From Italy to Britain and Poland, they want to shake up Europe's energy market and let loose its digital economy, alongside a call for an end to easy state guarantees for Europe's banking system.

A statement drafted for the leaders to sign demands an "urgent" revamp of priorities to boost employment among adults to 75 per cent, though nearly 24 million people are out of work across the EU and half of all youths jobless in blackspot Spain.

Perhaps the biggest argument during discussion on changes to the strategy will concern a bid to revamp tax policies right across the eurozone and the EU.

However, preparatory talks among European affairs ministers showed several states refusing to buy into a bloc-wide corporate tax alternative for multinationals, and a French-led financial transactions tax sought by nine states.

A call to dangle debt relief to cash-strapped Egypt and other north African and Middle Eastern Arab neighbours was already booted into touch despite moves to use the southern Mediterranean neighbourhood as another growth primer.

Talks on boosting a eurozone financial firewall have meanwhile been put back to later in March, after a distinct meeting of eurozone leaders on Friday was cancelled with Germany "not ready" to talk about pumping in more money.

Checks on whether Greece has met a list of conditions enabling currency partners to open the taps on a 237-billion-euro ($310 billion) bailout approved last week will also be discussed by EU finance ministers who meet in the hours before the summit begins. AFP

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