Prime Minister Lucas Papademos leaves his office after meeting the leaders of the three parties backing his coalition government in Athens on Sunday, Jan. 29 2012. Following the meeting, Papademos has released a statement saying he and the party leaders were in "complete agreement" over the positions to adopt in subsequent talks toward a 130 billion euros bailout for Greece and a bond swap agreement with private creditors. (AP Photo/Kostas Tsironis)
Prime Minister Lucas Papademos leaves his office after meeting the leaders of the three parties backing his coalition government in Athens on Sunday, Jan. 29 2012. Following the meeting, Papademos has released a statement saying he and the party leaders were in "complete agreement" over the positions to adopt in subsequent talks toward a 130 billion euros bailout for Greece and a bond swap agreement with private creditors. (AP Photo/Kostas Tsironis)
BRUSSELS (AP) ? Germany's chancellor has dampened her own country's controversial call to have a powerful European debt regulator who would have direct control over Greece's spending.
Angela Merkel said Monday "I believe that we are having a discussion that we shouldn't be having."
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."
Both Greece and the European Commission over the weekend rejected a proposal tabled by Germany for a new Commissioner who could force Greece to repay debts before maintaining government services.
Other European leaders said that the Commission, the EU's executive, needed the power to block bad spending decisions, but not only in Greece but also other highly indebted countries.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
BRUSSELS (AP) ? European leaders will try to come up with ways to boost growth and create badly-needed jobs, which are being squeezed by steep budget cuts across the continent, when they meet in Brussels on Monday.
The 27 EU leaders on Monday will also look to find common ground on a new treay to toughen budget spending. The elephant in the room, though, will be Greece.
Greece and investors who own its bonds 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 bailout.
Negotiators for the investors said Saturday a debt-reduction deal could become final within the next week. If the agreement works as planned, it could help Greece remain solvent and help Europe avoid a blow to its already weak financial system, even though banks and other bond investors will have to accept multibillion-dollar losses.
Still, it doesn't resolve the weakening economic conditions in Greece and other European nations as they rein in spending to get their debts under control.
Athens' euro partners have grown frustrated with its slack implementation of spending cuts and reforms almost two years after first receiving international aid.
Without an agreement, bankruptcy would loom large for Greece and raise a big question mark over the euro currency shared by 17 nations.
Another divisive issue is a German proposal that debt-ridden Greece temporarily cede sovereignty over tax and spending decisions to a powerful eurozone budget commissioner before it can secure further bailouts.
The idea was quickly rejected by Barroso's Commission and the government in Athens, both insisting the budget remain a national prerogative.
At the same time, the EU also has to deal with an increasingly tough labor market.
Spain's brutal unemployment rate 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.
To help jump-start the EU toward more growth and employment, the EU Commission is proposing to the summit leaders to redirect euro82 billion in existing development funds toward countries in dire need of help to fix their labor market.
The 27 heads of state and government got a taste of the popular frustration with austerity and high unemployment as they try to get to the summit in a city paralyzed by strikes.
Belgium's three main unions joined hands in a 24-hour strike to protest national budgetary measures that have in part been imposed on Belgium by the EU. If the country hadn't met cost-cutting targets, financial sanctions would have been imposed.
The big question at the summit is where to find money to boost growth when debt is preoccupying everyone. The austerity measures raise taxes and cut benefits for hundreds of thousands of workers in Belgium. And 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.
For Monday, Thalys and Eurostar bullet trains to Brussels have already been cut, one airport has been closed and Brussels international airport is expecting heavy disruption. Contingency plans have been made to get the 27 European leaders to the center of Brussels, but even then convoys could end up in choking traffic if workers block the capital's beltway during morning rush hour.
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