A third of eurozone countries will probably soon be relying on EU rescue funds because they can't raise the money they need on the open market. Already Spain and Italy are paying interest rates that are not sustainable in the long run.

The new socialist president of France, Francois Hollande, has turned out to be their champion on the first day of the EU summit in Brussels. "I have come here to get rapid solutions to support countries in the greatest difficulty on the markets even though they have made considerable efforts to restore their public finances" he said on Thursday. Europe, he added, needed "team spirit and solidarity."

His socialist colleague in Belgium, Elio di Rupo, was quick to offer his support. "If one doesn't help them, that would lead to a domino effect in the whole of Europe, and thus also for us," he said.

What Hollande, di Rupo, and others said at the start of the summit is what they've been saying for some time: the eurozone's debts have to be mutualized - for example through eurobonds.

A growth pact on the cheap

German Chancellor Angela Merkel has consistently rejected any suggestion of such a policy. She wants to protect Germany from being forced to bear the burden for the fiscal sins of others. And she also believes that, if risks were shared, any chance of improving budget discipline would vanish.

All attempts to bridge the gap between her and Hollande have so far failed. But when she arrived in Brussels she didn't mention this controversial topic - instead she praised the growth pact, intended to reduce unemployment and which the EU has already agreed to in principle.

Merkel said she hoped "that we would be able to pass this pact today and send a clear signal that, while of course we need sound budgets, we also need growth and jobs."

The fact remains, however, that the 130 billion euros ($160 billion) earmarked for growth is not new money; it has been redesignated from other sources, and is scarcely likely to be enough to make a serious difference to the situation.

Two camps

Meanwhile, the ideological battle over solidarity and joint liability continues. At a meeting of socialist leaders in Brussels, Austrian Chancellor Werner Faymann took the side of the eurobond supporters, even though Austria is generally held to be a champion of stability.

Merkel, for her part, won support from two non-eurozone countries - Swedish Prime Minister Fredrik Reinfeldt called on the leaders of countries with the biggest problems to say "we have a political commitment to follow through reforms needed in our countries to increase our competitiveness and bring down our deficits and debts, because I think that is at the heart of the European problem."

The president of Lithuania, Dalia Gribauskaite, was even clearer: "If you're after unconditional support from other countries, then no way! You have to do your homework."

France v. Schäuble

Because of these fundamental differences of opinion, it's unlikely that this summit will do much to deal with the crisis in any immediate way. But time is running out. And many people are getting nervous, like British Prime Minister David Cameron.

"These summits keep happening and not enough decisions are made," he said. Britain too, although it is outside the eurozone, is also being seriously affected by the euro crisis. But Cameron also has to suffer criticism: he doesn't get involved, other European leaders say, he just tells the eurozone members what they should do.

The disputes in the eurozone have also led to a standstill on the appointment of a new head of the Eurogroup. It looks now as if its current leader, Luxembourg Prime Minister Jean-Claude Juncker, will have to stay on, despite his reluctance. At one stage it seemed clear that he would be replaced by German Finance Minister Wolfgang Schäuble, but the new French government is so opposed to Schäuble that he has no chance. Juncker is supposed to leave in mid-July and the succession should have been sorted out long ago. Like many others related to the eurozone, this decision has been repeatedly put off.

Author: Christoph Hasselbach, Brussels / mll
Editor: Ben Knight