European Union (EU)
leaders began their two-day summit on Thursday amid a political crisis in
Portugal and protests by trade unions against austerity measures taken by
eurozone member states to struggle out of the debt crisis.

EU leaders pose for a family photo during the first day meeting of EU Summit in Brussels, capital of Belgium, on March 24, 2011. European Union (EU) leaders began their two-day summit on Thursday amid a political crisis in Portugal and protests by trade unions against austerity measures taken by eurozone member states to struggle out of the debt crisis. (Xinhua/Thierry Monasse)

“Even if all problems are
not over, we will agree today on treaty change, economic governance, Euro Plus
Pact and the European Stability Mechanism,” President of the European Council
Herman Van Rompuy told reporters hours before the summit.

“This European Council is
a turning point in the euro crisis management. We have achieved unimaginable
change in policy instruments, a quantum leap,” Van Rompuy said.

At the two-day summit, the
27 EU leaders are expected to endorse a long-awaited comprehensive package of
measures, which will include an expansion of the EU’s bailout fund,
establishment of a permanent rescue mechanism in the eurozone, a new round of
stress test in the banking sector and reforms to improve economic
competitiveness and convergence of eurozone economies.

However, the political
crisis that emerged in Portugal one day before the summit could dent the efforts
by EU leaders to shore up confidence in the stability of the eurozone.

Portuguese Prime Minister
Jose Socrates resigned on Wednesday night after the country’s parliament voted
against his new round of austerity measures aimed at reducing the high budget
deficit to avoid a bailout.

The Portuguese government
announced a series of adjustment measures during the past year to underline its
commitment to reduce the budget deficit from 7.3 percent of GDP in 2010 to 4.6
percent in 2011.

The measures, which
include pension reforms and tax hikes, have been strongly criticized by the
opposition parties, which claimed that the measures could further slow down
economic growth of the country.

Portuguese Finance
Minister Teixeira dos Santos warned before the parliament vote that rejecting
the austerity measures would induce financing difficulties that the country
could barely handle by itself.

The political turmoil
drove yields on Portuguese 10-year bonds to a record high of 7.90 percent on
Thursday, and analyst said that the country could hardly refinance its debt in
the coming months and a bailout by the EU seems inevitable.

Hours before the summit,
some 20,000 protesters took to the streets in Brussels, showing their anxiety at
the austerity measures and economic reform plans introduced by EU governments to
tackle the sovereign debt crisis.

Trade unions were
concerned about a new reform plan to be adopted by the EU leaders. The so-called
Euro Plus Pact, or competitiveness pact in its original name as tabled by
Germany and France, would see eurozone governments push ahead with painful
reforms and coordinate their economies more closely to boost competitiveness.

Trade unions have been
arguing the pact would undermine many cherished workers’ rights and that workers
should not be forced to pay for the mistake of the financial sector and
governments.

“Let there be no mistakes,
the workers of Europe … do not accept the idea that they are going to pay for
a crisis in the labor market that was made in the financial markets,” John
Monks, General Secretary of the European Trade Union Confederation which
organized Thursday’s protests, told a press conference.

VietNamNet/Xinhuanet