EU summit seeks debt crisis solution

European Union leaders held two summits on Sunday in an effort to tackle the eurozone debt crisis.

At the morning summit, the 27 European leaders discussed economic policy, including the promotion of growth and employment, and preparations for the G20 Summit.

And after that, eurozone leaders debated the financial situation and governance of the euro area.

The leaders have also discussed ways to mobilize the EU's external policies to promote the growth agenda, and previous reports have shown that the EU is willing to source funds from emerging economies such as China to shake off the crisis.

Kicking off the summits, European Council President Herman Van Rompuy said: "Today we will agree on measures to stimulate growth and to create jobs. We will also deal with the crisis in the eurozone."

By press time, the closed-door discussions were still under way and no detailed measures had been announced.

Van Rompuy said Europe is facing the problems of slowing economic growth, rising unemployment, pressure on banks, and risks in sovereign bonds, which are deeply serious.

"So our meetings of today and Wednesday are important steps - perhaps the most important ones - in the series to overcome the financial crisis," said Van Rompuy.

European leaders are so eager to achieve a comprehensive strategy at the two summits on Sunday and Wednesday that they even put off the scheduled China-EU leaders' summit on Tuesday.

On Friday and Saturday, EU finance ministers held preparatory sessions and agreed to release an 8 billion euro ($11 billion) lifeline loan for Greece and to seek a far bigger writedown of Greek debt by private bondholders.

Although the details were still unknown, the ministers agreed on the framework of recapitalizing European banks and to help them withstand losses on sovereign bonds.

Though French President Nicolas Sarkozy disagreed with German Chancellor Angela Merkel over strategy last week, he hoped for a breakthrough in the middle of the week after meeting her on Saturday.

"Between now and Wednesday a solution must be found, a structural solution, an ambitious solution, a definitive solution," Sarkozy told reporters. "There's no other choice."

Asked whether he was confident of a deal, he replied: "Yes, otherwise I wouldn't be here."

Reuters reported that the key outstanding issues were how to make Greece's debt burden manageable and scale up the eurozone rescue fund to shield Italy and Spain, the euro area's third and fourth largest economies, from bond market turmoil that forced Greece, Ireland and Portugal into EU-IMF bailouts.

Despite the worsening European debt crisis, experts complained that EU leaders have failed to take systematic measures to solve the crisis and Europe is faced with the challenge of transforming its development model.

"The EU leadership has completely failed to deal with the crisis in an effective way. Even now the actions being discussed only deal with the symptoms and not with the fundamental problems," said Duncan Freeman, senior researcher with Brussels Institute of Contemporary China Studies.

Freeman said the divisions among EU member states reflect conflicting interests regarding the debt crisis, with no government willing to accept responsibility for causing the crisis or to bear the costs for resolving it.

But Professor Stephan Keukeleire from Katholieke Universiteit Leuven in Belgium said there is a lot of discussion about the disagreements within EU member countries, but what people don't really realize is that these disagreements are normal.

"I'm therefore actually quite positive. The EU has already come out with measures that weren't even accommodated in previous agreements, so already they're doing more than necessary," said Keukeleire.

However, he also said the EU is dealing with a systemic crisis, one that brings into question the Western European socioeconomic model.

Professor Iain Begg, from London School of Economics and Political Studies, said he supports eurobonds and said it inevitable that they will eventually become part of a reformed euro framework.

"But they are not a solution to crisis management today, but more like what should emerge once the immediate crisis is resolved," said Begg.

Cecily Liu in London and Eveline Filon in Brussels contributed to this story.