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Nervy euro summit once more for Nobel-laureate EU

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(BRUSSELS) - Nobel Peace Prize in hand, European leaders meet for a final 2012 summit on Thursday still facing the uncertainties of the debt crisis and with unsettled Italy back in the spotlight.

The summit is meant to achieve two things -- a much-vaunted but contested plan for a single European bank supervisor and final clearance of an ever-more complicated deal on Greek debt bailout payments worth 43.7 billion euros ($55 billion).

The single bank supervisor system was supposed to have been largely in place by now but EU finance ministers failed to reach agreement last week owing to sharp differences between France and Germany over its scope and powers.

To make up the lost ground, the 27 finance ministers meet again late on Wednesday.

Meanwhile, their 17 eurozone peers will discuss progress on a key Greek debt buy-back by phone on Tuesday before reconvening early on Thursday just ahead of the summit itself.

European Parliament head Martin Schulz, speaking in Oslo on Tuesday after the Nobel prize ceremony, said the bloc's problems were political, with everyone agreeing greater integration was the answer to the EU's problems.

"The euro is a strong currency with a poor political management ... that is what is our biggest political problem, the lack of trust," Schulz said.

"We must regain trust, then the leaders of the European Union must decide if they give to the European Union the necessary instruments to manage our economic and monetary union."

With Europe in recession and Spain, Greece and other weaker economies faced with soaring unemployment, even economic and political powerhouse Germany faces testing times as Chancellor Angela Merkel bids for September re-election.

Agreement between France and Germany is crucial but going into the summit they seem to have quite different views and considerations in mind.

Crisis "is behind us"

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"The euro crisis, I've said it before, is behind us," French President Francois Hollande said after joining Merkel to celebrate the Nobel award in Oslo.

"We've given Greece the funds it was waiting for. In Spain we've helped keep the banks afloat. In Italy, even if there's political uncertainty, I'm sure the Italians will address it," Hollande said.

"I cannot lift the alert completely," said "prudent optimist" Merkel, after the German central bank said Europe's biggest economy may flirt briefly with recession.

As Merkel keeps a close eye on her voters in the run-up to the polls, what was meant to be a triumphant summit charting ever-closer EU integration in the years ahead may prove disappointing, analysts said.

"There is the sense in Berlin that others are becoming complacent," Janis Emmanouilidis, senior analyst and German specialist at the leading Brussels-based European Policy Centre told AFP.

"There will be a different political wind in Germany from September, even if Merkel gets back in -- but until then, everything is on pause," he said.

"Ultimately, Spain, Italy and eventually France are the variables -- what does France want at a national level? ... With Hollande, there is no way to find a grand bargain before the German election," Emmanouilidis said.

Summit chairman and EU Council President Herman Van Rompuy wanted the meeting to set out how leaders would rewrite the EU's treaties so as to make the economic and political union stronger.

This is to be achieved through ever-closer economic and fiscal policy coordination and integration to the point where the EU may ultimately have its own central budget, acting like a single, sovereign power.

But be in in London, Barcelona or Edinburgh, where eurosceptic or independence-minded sentiment is firmly on the increase, the timing appears wrong for any move by Brussels to grab more powers.

It is most likely that a hard-fought agreement of sorts will emerge on how to regulate the bloc's banks but focus on banking supervision may actually end up "counter-productive," having "crowded out more pertintent areas," analyst Sony Kapoor said.

"It won't help deal with Italy's re-emerging and deep-rooted political problems," the London School of Economics Fellow told AFP, referring to the jockeying now under way ahead of Italian elections in February.

Like Emmanouilidis, he cited as key the failure to agree a meaningful, multi-pronged "banking union," as promised, just slightly better supervision.

"Between the German election ... the friction over banking union generally, and Spain and Italy... we are building up to an even more interesting and volatile 2013," Kapoor said.

European Council


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