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Greece's Deficit Crisis to Top European Union Summit

Greece's deficit crisis will be a top item of a European Union summit in Brussels Thursday, with expectations that some EU countries will offer assistance to Athens. 

The European currency, the euro, rose early Thursday, as European leaders headed to Brussels for their first summit of the year.  Hopes are high there will be some sort of European aid for one of the most troubled members of the eurozone, Greece, which is struggling under massive debts.

Late Wednesday, Prime Minister Jose Luis Rodriguez Zapatero of Spain, which holds the rotating European Union presidency, told reporters the bloc would help Athens out. There are reports that some eurozone members - notably Germany and possibly France - may offer some sort of bilateral assistance.

But Richard Gros, director for the Center for European Policy Studies in Brussels, says any European help will be insufficient.

"What's needed right now is a common European approach to a systemic issue," he said. "It's not just Greece that needs help, but a number of countries that are in a similar situation which might need in the future financial help.  That's why we need a European institution like a European monetary fund which could deal with this kind of situation."

Greece has drafted tough measures to cut its spending and vowed to stick to them.  Jean-Claude Trichet, president of the European Central Bank, is among the EU officials hammering that message home.

"On Greece, I said what I had to say - they have to reach the goals that they have fixed for themselves. It's absolutely crucial," he said.

But Greece also faces the prospect of massive social unrest as it reins in its spending. Workers staged a nationwide strike on Wednesday that shuttered airports, government offices, courts and schools.

Spain and Portugal also have shaky economies. "In Spain, I think the problems are both severe and less severe. Spain has a problem in its construction sector, but if the government can keep it under control, I think it should be fine," said CEPS director Richard Gros.

But Gros notes that Portugal, like Greece, has been consuming too much and it will be difficult for both to push through tough austerity measures.

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