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EU Leaders Want Greece To Remain In Eurozone, But Warn On Commitments

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European Council President Herman Van Rompuy holds a news conference after the informal EU leaders summit in Brussels on May 23-24.

European Council President Herman Van Rompuy holds a news conference after the informal EU leaders summit in Brussels on May 23-24.

European Union leaders say they want Greece to remain in the eurozone -- but have repeated warnings that the debt-crippled country will have to fulfill its reform promises.

Leaders from the 27 EU member countries at a summit that ended early on May 24 in Brussels discussed whether austerity programs or measures to push economic growth should take the lead in efforts to move the EU economies out of crisis.

The discussions, however, were overshadowed by fears that Greece may be unable to meet its commitments and could be forced to leave the eurozone. Reports say the 16 other eurozone states have been preparing contingency plans in case of a Greek exit.

The euro hit a fresh 22-month low on May 24, at about $1.25, amid the continuing uncertainty.

EU President Herman Van Rompuy, speaking at the end of the summit, pledged that the EU will help Greece overcome its deep economic problems.

"We will ensure that European structural funds and instruments are mobilized to bring Greece on a path towards growth and job creation," he said.

But Van Rompuy insisted Greece must respect its commitments if it wants to continue receiving hundreds of billions of euros of financial aid from the EU and the International Monetary Fund (IMF).

"Continuing the vital reforms to restore debt sustainability, foster private investment, and reinforce [Greece's] institutions is the best guarantee for a more prosperous future in the euro area," he said.

"We expect that after the elections the new Greek government will make that choice."

Greece has promised to implement tough economic reforms and budget cuts in return for some $240 billion euros ($301 billion) worth of bailouts so far agreed with the EU and the IMF.

Growth Vs. Austerity

But there are concerns that if antiausterity parties prevail in Greece's early elections next month the deal is likely to be broken. Disagreements over austerity measures have been blocking Greek politicians from agreeing on a new government to lead the country out of the crisis.

Concerning the bloc-wide economic slowdown, European Commission President Jose Manuel Barroso said the European Union needed both austerity and pro-growth measures to escape decline.

"The choice between stability and growth should not be seen exactly as a choice. We need both," Barroso said. "On that there was clear consensus around the table on this."

New French President Francois Hollande is pushing for growth-oriented policies to rebalance the tough austerity measures demanded by Germany.

Hollande, who was attending his first EU summit since taking over at the Elysee Palace, also said he wanted to see eurobonds "written into the EU agenda."

German Chancellor Angela Merkel is resisting the eurobonds. The bonds would make loans cheaper for struggling economies like Spain, but more expensive for stronger economies like Germany.

With reporting by dpa, BBC, and Reuters

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