Europe’s leaders are getting radical.  On Thursday the presidents, prime ministers and chancellors of the European Union will meet for a day of economic policy discussions in Brussels - but not in their normal location, the marble-and-glass Council of Ministers building, famous for its charmless, disinfected atmosphere and its 24km of headache-inducing corridors.  No, this time they will get together in a nearby building called the Bibliothèque Solvay, which is a pleasant old library rented out for dinners and receptions.

The switch of location was the brainwave of Herman Van Rompuy, the EU’s first full-time president, who thought it would encourage a more creative, informal exchange of views.  He has introduced another innovation: each leader is to be restricted to just one adviser at the talks.  This isn’t a problem for countries with leaders who are masters of economic policy detail.  But others are less happy about the arrangement.  It is whispered that the Italians are swallowing especially hard, wondering what on earth Prime Minister Silvio Berlusconi will say once he’s on his own.

The discussions are supposed to focus on a new EU plan, dubbed the 2020 strategy, which is all about boosting Europe’s economic growth and protecting its social model over the next 10 years.  Europe’s approach to international climate change negotiations is also likely to crop up, as is the question of aid to earthquake-hit Haiti.  It’s an informal summit, so at the moment there are no plans for a communiqué.

All well and good.  But as you can tell, there’s one thing missing - something so big that it’s almost surreal not to see it on the agenda.  This is the fact that European monetary union is at present undergoing the most severe test of its 11-year history.  There is turmoil in the debt markets, and investors are increasingly doubtful that Greece can emerge from its fiscal crisis without emergency external help.  Contagion is spreading to Portugal and Spain.  It may spread further still.

Yet in public the German and French governments rule out assistance for Greece.  As a result, no one can put their hand on their heart and say they know what the EU will do if matters get worse.  Indeed, no one even knows which EU authorities and which decision-making mechanisms would come into play.  It is amazingly irresponsible and it is making the markets extremely jumpy.

At a moment of such high tension, it would almost defy belief if the EU’s leaders met for a day of talks and said nothing about the Greek crisis and its associated risks.  If they emerge from the summit and give an ambiguous message to the media and markets about what their plan of action is, it would be worse than if they hadn’t met in the first place.  If they come out and start jabbering about unnamed sinister forces trying to sabotage the euro, that would be terrible, too.

What is needed is a crystal-clear statement explaining how the EU - and the eurozone in particular - will handle this emergency.  The trouble is, I have a horrible feeling that too many EU leaders just don’t get it.

Whether it’s climate change, foreign policy or the increasingly alarming fiscal crisis, the European Union’s difficulties can be summed up in one word: disunity.  After December 1, when the EU’s Lisbon treaty came into force, disunity was supposed to be a thing of the past.  Instead, disunity has proved to be very much a thing of the present.  What’s more, the Lisbon treaty may - at least in the short term - be making matters worse.

Take the world conference on climate change at Copenhagen in December.  According to Connie Hedegaard, the EU’s incoming climate change commissioner, disunity - in the sense of a cacophony of European voices - was an important factor behind the ability of other powers to brush aside the EU’s views.  “Those last hours in Copenhagen, China, India, Japan, Russia and the US each spoke with one voice, while Europe spoke with many different voices.  Sometimes we spend so much time agreeing with one another that when finally the EU comes to the international negotiations, we are almost unable to negotiate,” she told her confirmation hearing at the European Parliament last month.

The outcome of the Copenhagen conference hurt the EU, which couldn’t understand why Europe had been ignored when it had such progressive ideas about tackling climate change.  Still, on climate change the EU’s 27 countries do at least put on a certain display of unity.  They share a common target of a 20 per cent cut in greenhouse gas emissions by 2020 from 1990 levels.  They may even achieve this goal.

There is no such common approach visible in the fiscal emergency unfolding in Greece, Portugal and Spain.  This crisis cries out for more vigorous action from the eurogroup, the body that brings together finance ministers from the 16-nation eurozone.  For the sake of calming financial markets, it demands clarity from  eurozone governments about what they plan to do.  Instead, all the markets hear is that eurozone leaders are determined not to involve the International Monetary Fund, but don’t want to give any financial assistance themselves to Greece.  From the markets’ point of view, this is not exactly reassuring.

Disunity on foreign policy is just as obvious as it was before the Lisbon treaty came into effect.  It was painfully visible this week as a squabble broke out over who was responsible for Barack Obama’s decision not to travel to Spain in May for a US-EU summit.  Officials close to Herman Van Rompuy, the EU’s full-time president, said it was nothing to do with him.  They implied it was the fault of Spain, holder of the EU’s rotating presidency.  It does not seem to have occurred to the Europeans that Obama decided not to go because he couldn’t figure out who speaks for Europe - even after the Lisbon treaty - and how the summit would produce practical results in terms of Europe’s contribution on Afghanistan, Iran, Bosnia and so on.

Meanwhile, Spain is also getting flak for floating the idea of lifting the EU’s arms embargo on China.

The fact is, multiple contests for influence are going on inside the EU, some old and some triggered by the Lisbon treaty: i) between the full-time presidency and the rotating presidency; ii) between the rotating presidency and the office of the EU’s foreign policy chief, Baroness Catherine Ashton; iii) between national governments and the European Parliament; iv) between national governments and the European Commission; v) between political groups in the Parliament, a struggle that seeps its poison all over Brussels; and vi) between the Commission and the Parliament.

This last contest needs careful monitoring, because the Parliament is seeking to exploit its enhanced position under the Lisbon treaty to claim obscure but important new rights.  José Manuel Barroso, the Commission president, has just conceded that the legislature should have the same degree of access as EU governments to documentation on Commission meetings with national experts.  He has also agreed that all commissioners, even Lady Ashton, will be grilled at a new “Question Hour” during the assembly’s plenary sessions.  And he will seriously consider asking a commissioner to resign if the Parliament asks him to withdraw his confidence in him or her.

The EU’s institutions are in a highly fluid state as a result of the Lisbon treaty.  Maybe it will take some time before they begin to acquire a coherent shape.  But for the moment, the rest of the world is baffled and a little impatient.

From central Ukraine and capital Kiev, a leading oligarch, a bar owner, a foreign investor and ordinary hard-hit people discuss what the new president needs to do to mend Ukraine’s broken economy.

Medicine for Europe’s sinking south (Nouriel Roubini & Arnab Das, FT)

Greek PM signals painful reforms (Kerin Hope & Ralph Atkins, FT)

Ukraine rivals clash amid fraud fears (Stefan Wagstyl & Roman Olearchyk, FT)

Spain is a serious country (A fistful of Euros)

The not-so-safe Eurozone (New York Times)

President Barack Obama’s decision not to travel to Spain in May for a US-European Union summit does not come as a great surprise to EU policymakers.  They knew weeks ago that he had gone cool on the idea.  Nonetheless, it will hurt.  It will be read as a signal from the White House that the president doesn’t think the meeting would be especially productive.  And that speaks volumes about how other powers, even allied countries such as the US, view the EU as a force on the global stage.

“An unsentimental President Obama has already lost patience with a Europe lacking coherence and purpose,” wrote Nick Witney and Jeremy Shapiro in a report last November for the European Council on Foreign Relations think-tank.  “In a post-American world, the United States knows it needs effective partners.  If Europe cannot step up, the US will look for other privileged partners to do business with.”

Obama’s decision will hurt all the more because the EU is in the process, so it thinks, of beefing up its common foreign policy and the way it projects itself to the rest of the world.  Now that the EU’s Lisbon treaty is in force, the 27-nation bloc has a full-time president, Herman Van Rompuy of Belgium, and a foreign policy chief with enhanced powers, Britain’s Baroness Catherine Ashton.  Along with José Manuel Barroso, the European Commission president, and José Luis Rodríguez Zapatero, Spain’s prime minister, this pair would presumably have been in Madrid to greet Obama.

But in a way this is precisely the EU’s problem.  Obama and other world leaders can’t figure out who exactly speaks for Europe.  So far, the main effect of the Lisbon treaty seems to have been simply to add one more European - Van Rompuy - to the party.  Neither Barroso nor Zapatero is showing any inclination to step to one side and let Van Rompuy be Europe’s main man.  It hardly helps, of course, that virtually no one in Washington had heard of Van Rompuy or Ashton until EU leaders picked them in November for two of the bloc’s highest jobs.

However, the Obama decision is about more than US-EU relations.  It is about the EU’s obsolete practice of holding regular summits with third parties - Canada, China, India, Japan, Russia, South Africa, the US and so on - that are usually almost completely empty of substance.  I recall travelling to Bordeaux in July 2008, when France held the EU’s presidency, to watch President Nicolas Sakozy host a summit for Thabo Mbeki, South Africa’s president.  It was all over in a flash.  Sarko even left early so that he could return to Paris to meet Obama, who at that point was a mere candidate for the presidency making a quick trip to Europe.

That told you everything you needed to know about the value of EU summitry.  Although Madrid is a lovely place to be in May, Obama is quite right not to bother going there.

Just who are these dark forces attacking Greece? (Charlemagne blog, Brussels)

Greek bailout news (Edward Hugh, A fistful of euros)

EU calls for Athens to cut public sector pay (Tony Barber and Kerin Hope, FT)

UN throws weight behind Cyprus talks (FT reporters, FT)

The expression “it never rains but it pours” may seem inappropriate for a Mediterranean country such as Greece.  But it was the phrase that sprang to mind when I heard last week that Greek tax collectors are planning to go on strike in protest at the government’s austerity measures.  Like the political manipulation of budget data, the inefficiency of the tax system is one of the Greek state’s most glaring weaknesses.  How will a tax collectors’ strike help matters?

That said, I do not share the view of German and French government officials who insisted vehemently last week that the solution to Greece’s problems lies almost entirely with the Greeks themselves.  If this were the answer, nothing would be simpler than for the Greeks to roll up their sleeves and get on with a 10-year programe of wage restraint and productivity growth.

The truth is less pleasant: the Greek turmoil reflects a wider crisis of imbalances in the 16-nation eurozone, and everyone will have to make a contribution to bring this wider crisis under control.  Specifically, Greece and a few other countries - notably, Portugal and Spain - have very big current account deficits, while Germany, Europe’s champion exporter and the the eurozone’s largest economy, tends to run big current account surpluses.  The Greek deficit was a remarkable 12 per cent of gross domestic product in the third quarter of 2009, and Portugal’s stood at 10 per cent.

For sure, Greece and Portugal need to improve their competitiveness, but they would also benefit from stronger foreign demand for their products and services, especially in Germany.  In order to overcome the eurozone’s crisis, it will be as necessary to raise demand in Germany and other surplus countries as to hold down wages and root out corruption in Greece.

This will be no easy task, for just as the mentality of German business is geared to the ruthless pursuit of international competitive advantage, so the mentality of German society is in many respects doggedly attached to the goal of amassing domestic savings.  Yet in the long run it would be in Germany’s best interests to reduce the eurozone’s imbalances.  The alternative - emergency financial support for Greece, arranged through gritted teeth and against the wishes of a disgruntled German public opinion - would surely be worse.

A potentially decisive moment is approaching in the Cyprus settlement talks that started in September 2008.  Ban Ki-moon, the United Nations secretary-general, is to visit the divided island on Sunday and stay there until Tuesday.  He does not, of course, have the authority to impose a settlement or even seriously to bang heads together.  But what he can do is impress on the Greek Cypriot and Turkish Cypriot leaders that the world is watching them and that a great deal hangs on the outcome of their negotiations.

A sense of urgency hangs over the talks because presidential elections will be held in Turkish Cypriot-controlled northern Cyprus on April 18.  Mehmet Ali Talat, the leftist president who helped revive the effort at reaching a comprehensive settlement more than 16 months ago, looks vulnerable to the challenge of Dervis Eroglu, the nationalist prime minister.

Eroglu says that, if he wins, he will not break off the talks with Demetris Christofias, the Greek Cypriot leader.  But the prospects for a deal would surely diminish, because Eroglu advocates a “two-state solution” to the Cyprus problem - i.e., one based on recognition of the north’s separate statehood.  This is not only unpalatable to the Greek Cypriots but runs contrary to the whole thrust of the UN-sponsored negotiations.  

The temptation to be cynical about the Cyprus talks is strong, but should be resisted.  I have met both Talat and Christofias, and I do not doubt their sincerity when they say they want a deal.  However, both men are operating under severe political pressures in their respective communities, and the time constraints are starting to tell.

True, it can sometimes feel as if time has stood still since Turkish forces invaded and partitioned the island in 1974.  The Greek Cypriots, who control the internationally recognised government of Cyprus, appear to feel little incentive to negotiate a settlement.  After all, they have spent almost six years as full members of the European Union, and have even been allowed into the eurozone, without having to pay any political price at all.

As for Turkey, it is surely an anachronism for a country that has modernised itself and opened itself up to the world so much over the past 30 years to continue to station at least 21,000 troops on Cyprus (the Greek Cypriots say the real figure is 43,000).

But as an excellent commentary by Didem Akyel of the International Crisis Group points out, “if this round of talks fails, that will be the surest route to partition, resulting in great losses for Cypriots and all others affected by the dispute”.  It would certainly strike a blow at Turkey’s already waning hopes of EU membership and at the possibility of closer EU-Nato co-operation.

Ah, but perhaps there are some EU countries that would secretly welcome both prospects?