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EU, Latin America leaders meet in shadow of debt crisis

European and Latin American leaders meet for a summit beginning Monday aimed at restarting long-stalled trade talks, but a boycott threat and Europe’s debt crisis have overshadowed the gathering.

Most Latin American leaders are set to attend despite an earlier boycott threat related to Honduras’s president, but less participation is expected from the Europeans as they battle the continent’s spiralling debt crisis.

Some 60 countries will be represented at the gathering, which will also include Caribbean nations.

German Chancellor Angela Merkel is expected, but French President Nicolas Sarkozy has not confirmed he will attend. New British Prime Minister David Cameron and his Italian counterpart Silvio Berlusconi will skip the meeting.

Spain hopes the summit will be a high point of its EU presidency, which it holds through June, but careful diplomacy will be needed from Prime Minister Jose Luis Rodriguez Zapatero and EU president Herman Van Rompuy.

The meeting is supposed to lead to the restart of free trade talks between the EU and Latin American bloc Mercosur, but 10 European nations, led by France, oppose the move.

The European Commission announced in early May it would reopen negotiations with Mercosur, which were suspended in 2004, but France had argued that the talks could threaten Europe’s farmers.

Spain has criticised its fellow European countries over their opposition to the talks with Mercosur, which groups Argentina, Brazil, Uruguay and Paraguay.

A separate “association” deal with Central American nations touching on a wide range of issues has also been held up due to trade disputes.

Another potential trouble spot, however, seems to have been overcome after a number of Latin American leaders threatened to boycott the summit over the attendance of Honduran President Porfirio Lobo.

South American nations, apart from Colombia and Peru, dispute his election in a vote organised by the backers of a June 2009 coup which toppled former president Manuel Zelaya.

Lobo has announced he will avoid the summit, but is still expected to travel to Madrid for a parallel meeting between the European Union and Central America.

Shortly after the announcement, a source from the Brazilian presidency said Luiz Inacio Lula da Silva and other South American leaders who consider Lobo’s election illegitimate were now expected to attend the summit.

Lula is to attend on the heels of a visit to Iran, where he arrived on Sunday for a non-aligned summit.

However, Venezuelan President Hugo Chavez still does not plan to be in Madrid.

The Madrid summit comes with the eurozone embroiled in a debt crisis that saw the currency fall to an 18-month low against the dollar on Friday.

The euro’s decline has come despite a massive rescue package unveiled Monday amid fears that the perilous debt crisis in European Union member Greece could spread to other countries in the 16-nation eurozone.

Portugal and Spain have also been struggling to stabilise public finances as massive debt and budget deficits have eroded market confidence and driven up borrowing costs.