BRUSSELS ? With another recession looming, European leaders on Monday met in Brussels to discuss ways to stimulate growth and create badly needed jobs, even as they drew up tighter spending limits to avoid a repeat of the crippling debt crisis.
Europe's debt crisis has put the continent and its leaders in an almost impossible situation. While they have to slash their deficits to reassure investors reluctant to lend to them, the debt crisis has also hammered the so-called "real economy," sending unemployment soaring. Many think that only government spending can restart growth.
While the 27 EU leaders meeting in Brussels will focus on walking the fine line between reining in spending and stimulating growth, the elephant in room is Greece.
Greece and its bondholders have come closer to a deal to significantly reduce the country's debt and pave the way for it to receive a much-needed euro130 billion ($170 billion) bailout.
Negotiators for Greece's private creditors said Saturday that a debt-reduction deal could become final within the next week. If the agreement works as planned, it could help Greece avoid a catastrophic default, which would be a blow to Europe's already weak financial system.
But European officials are afraid that even that deal may not be enough to fix Greece's finances, with some blaming Athens for dithering in its austerity promises.
German officials over the weekend proposed that Athens temporarily cede control over tax and spending decisions to a powerful eurozone budget commissioner before it can secure further bailouts.
The idea proved immediately controversial ? both the European Commission and the Greek government refuted it ? to the point that German Chancellor Angela Merkel pulled back on the idea when she arrived in Brussels.
She said Europe had to support Greece in implementing promised austerity and reform measures, "but all that will only work if Greece and all other states discuss this together."
Luxembourg Prime Minister, and head of the group of eurozone finance ministers, Jean-Claude Juncker told reporters as he entered the summit that Greece couldn't be singled out.
"I'm strongly against the idea of imposing the debt commissioner only to Greece, that's just not acceptable" neither for Greece nor the rest of Europe, Juncker said.
The negotiations in Greece are crucial because it is clear that Athens will never be able to pay off all of its debts, especially as austerity measures take their toll on its anemic economy. Martin Schulz, president of the European Parliament, cautioned against punishing Greece too severely.
"Greece needs an economic relaunch today and not in 2016," he told reporters on the sidelines of the summit. "So why not put together a stimulus package today instead of discussing another time a reduction in spending in a country that's in an economic depression?
He said that there are European funds for that kind of stimulus, but unlocking them has always posed a challenge.
The European Commission has proposed to summit leaders that euro82 billion in existing development funds be redirected toward countries in dire need of help to fix their labor markets.
Greece is not alone in facing slow growth and high unemployment. In Spain, for example, unemployment has soared to nearly 23 percent and closed in on 50 percent for those under age 25, leaving more than 5 million people ? or almost one out of every four ? out of work as the country slides toward recession.
Even countries in the so-called European "core" ? which are generally better off ? are suffering. The French government was forced Monday to revise down its growth forecast for the year from 1 percent to just 0.5 percent.
In fact, many now fear that Europe is on the verge of another recession, and leaders gathering Brussels said that spurring growth would be the focus of their talks Monday.
A draft of the summit conclusions, obtained by The Associated Press, proposes reducing barriers to do business across the EU's 27 states and giving better training to young people, who are particularly hard-hit by unemployment.
But it does not contain any new financial stimulus to boost growth, even though turning around Europe's economy would likely require more stimulus from governments, which are currently under pressure to cut ? rather than increase ? spending.
"We have to have balanced budgets and at the same time focus on growth and jobs," said Prime Minister Helle Thorning-Schmidt of Denmark, which holds the rotating presidency of European Council. "It is possible to both at the same time and it is important to understand that these are two sides of the same coin."
The 27 heads of state and government got a taste of the popular frustration with austerity and high unemployment on their way to Monday's summit in a city paralyzed by strikes. Leaders had to fly into the military airport of Beauvechain 20 miles (30 kilometers) outside of Brussels after the city's main airport was shutdown by a 24-hour strike.
Belgium's three main unions joined forces in the walkout to protest national budgetary measures that have in part been imposed on the country by the EU. If the country hadn't met cost-cutting targets, financial sanctions would have been imposed.
Monday's strike has been mirrored in many other member states. Overall, 23 million people are jobless across the EU, 10 percent of the active population.
"Europe has to offer jobs, social protection and perspective for the future. Otherwise it risks losing the support of its citizens," said the strike manifesto of the ACV union.
___
Associated Press writers Don Melvin, Robert Wielaard and Raf Casert contributed to this story.
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Public release date: 29-Jan-2012
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