Eurobonds set to divide summit for growth

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EU leaders are gathering in Brussels on Wednesday to discuss how to kick-start growth in Europe while keeping deficits down.

New French President Francois Hollande has increasingly been putting pressure on German Chancellor Angela Merkel to reconsider her negative views on Euro bonds, bonds jointly underwritten by all eurozone member states. Hollande warned on Saturday during a G8 Summit in Camp David that he is not alone in supporting the proposal. Italy's Monti, Spain's Rajoy and the EC are expected to back the idea.

As the biggest economy in Europe, mutualizing common European debt would mean Germany having to finance sovereign debt from other countries. Merkel has already said she does not rule out euro bonds as a long-term prospect, but under one condition: a more integrated political and fiscal European Union.

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Greece and the unofficial talk of a Greek euro exit are also set to be discussed. After the elections earlier this month, the Greek political parties failed to form a government, so new elections have been called for the 17th of June, less than two weeks before the next EU summit. Radical left-wing group Syriza is set to become the biggest political party and they completely oppose the severe austerity measures imposed by Brussels and the IMF. The European commission wants Greece to stay inside the euro area.

Because of the political disagreements, talk of a Greek euro exit is no longer taboo. It's a prospect that certainly will be discussed again in the coming days, even though this week's Euro summit is only seen as a prelude to the bigger one next month.

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