With the approval of additional EU loans for Greece now pending a parliamentary vote on austerity measures in Athens next week, European leaders moved on to other orders of business during the second day of their summit in Brussels.

Perhaps the least controversial decision has been to conclude accession talks with Croatia. The small western Balkan country, however, will face a strict monitoring system to ensure that it has implemented reforms before it can officially join the EU in July 2013.

Yet EU Commission President Jose Manuel Barroso believes Croatian EU membership in two years is a foregone conclusion.

"I hope everything will be ready to welcome Croatia as the 28th member of the European Union on July 1, 2013," Barroso said

Draghi nomination

Although the nomination of Italian Mario Draghi to follow Frenchman Jean-Claude Trichet as the next head of the European Central Bank was politically uncontroversial among EU leaders, procedural confusion made the nomination process more complicated than had been anticipated.

The Italian sitting member of the Bank's board first refused to quit, which would have given Italy two members while leaving France with none. However, after massive political pressure, the Italian member, Lorenzo Bini Smaghi, promised to resign. German Chancellor Angela Merkel welcomed the agreement.

"I'm glad that Mario Draghi will be the new president of the European Central Bank," Merkel said. "I think this is a very positive signal for the independence and for a stability-oriented policy of the Bank.”

Initially, there had been doubts whether an ECB president from debt-ridden Italy would send the right message. But the German chancellor's green light seems to have tipped the balance in Mr Draghi's favor.

Schengen controversy

While Croatian EU accession and the Draghi nomination were relatively uncontroversial, the influx of migrants from North Africa has placed a strain on relations between EU member states, particularly France and Italy. As a consequence, the border control-free Schengen area has come under growing scrutiny by French President Nicolas Sarkozy among others.

"I'm very attached to Schengen but I've come to the conclusion that if we don't reform the Schengen regime we risk losing it altogether," said Sarkozy.

In an attempt to avoid future disputes, the EU chiefs have decided to make the re-introduction of border controls possible in certain circumstances and for a limited time, for instance to keep out migrants.

EU Council President Herman Van Rompuy, however, called on Europe to focus its energy on resolving the causes of migration rather than the symptoms.

"The best way against migratory pressure is to help people in North Africa and the Mideast," said Van Rompuy.

But migration has become one of the hottest issues in Europe, giving rise to xenophobic parties in many European countries. The EU is now tempted to sacrifice one the most popular projects of European integration - control-free borders - to defuse the situation.

Author: Christoph Hasselbach, Brussels / slk
Editor: Susan Houlton