PARIS — The leaders of the 27 countries that make up the European Union are to meet in Brussels today to try to find a way to keep the debt crisis in Europe from spiraling out of control and to promote jobs and growth.
On Tuesday, the Organization for Economic Cooperation and Development warned that the 17 countries that use the euro risk falling into a "severe recession."
It called on governments and Europe's central bank to act quickly to keep the slowdown from dragging down the global economy.
However, switching the conversation from slashing budgets to promoting growth won't be easy. And actually producing growth will be even harder.
WHAT'S ON THE AGENDA
For the past few years, fiscal austerity was all anyone ever talked about in Europe. For many people, austerity meant layoffs and pay cuts for state workers, scaled-back spending on welfare and social programs, and higher taxes and fees to boost government revenue.
At the height of the debt crisis last winter, the eurozone — led by German Chancellor Angela Merkel — proposed a so-called "fiscal pact" that would tie member countries to strict fiscal and deficit targets.
But, as many economists had predicted, austerity has dragged down already-fragile economies and, as economic output shrinks, the debt burden actually looks worse.
As a way out of this problem, economists and politicians have called for measures that would help a country's economy grow. France's new Socialist president, Francois Hollande, has led the charge, insisting during his campaign that he would not sign Europe's fiscal pact until it includes measures to promote growth.
HOW DO YOU PROMOTE GROWTH?
Leaders at today's summit in Brussels are expected to tread a fine line between talking about ways to promote growth and sticking to commitments to balance budgets.
So where will the money to boost growth come from?
• The European Union has a pot of so-called "structural funds," many of which are going unused even though several countries are in desperate need of cash. Putting those to use will be one topic today.
• Countries are also expected to discuss increasing the size of the European Investment Bank so that it can, in turn, lend more money to struggling small businesses.
• Diplomats have already agreed to issue EU "project bonds" — debt issued jointly by the union — which can be used to fund major infrastructure projects. But only a pilot phase of the project has been approved.
WHAT'S LIKELY TO BE CONTENTIOUS
The idea of project bonds is seen by many politicians and economists as a step toward so-called "eurobonds" — jointly issued bonds that could be used to fund anything and could eventually replace an individual country's debt. Eurobonds would protect weaker countries, like Spain and Italy, by insulating them from the high interest rates they now face when they raise money on bond markets. Germany is still staunchly opposed to such a measure.
WILL ANY OF IT WORK?
The problem with many of the solutions on the table is that even if they are all implemented, they would likely take years to yield growth. And Europe needs faster answers. To that end, many economists are pushing for a larger role for the European Central Bank — the only institution powerful enough to have an immediate impact on the crisis. If Europe's central monetary authority was given the power to buy up a country's bonds, that government's borrowing rates would be pushed down to more manageable levels.
WHY IT MATTERS
Taken together, the European Union is the world's largest economy. If it isn't growing, that weighs on the rest of the world. A lack of growth is also hurting the continent's efforts to rein in deficits and cut debts. When growth slows, so does tax revenue. That makes it harder for a government to balance its books — which can mean it has to make even deeper cuts.