FINANCE MINISITERS of the 17 eurozone countries are to discuss proposals to give an up to €17 billion bailout to troubled Cyprus at an extraordinary meeting later today.

Heavily exposed to the Greek economy, Cyprus is facing a mounting debt problems that will require a mix of tax rises and one-off revenue-raising measures in order for it to qualify for an EU/IMF bailout.

It will become the fifth country from the single currency area to access external funding if the money, that will be financed by the European Union and the International Monetary Fund, is paid out.

Eurozone finance ministers meet today to consider proposals but are unlikely to sign off on any agreement and another meeting is already planned for next week.  Eurozone veteran Jean-Claude Juncker said that ministers must fix a bailout soon.

“The Cyprus question should not just be brought closer to a solution – it should be solved,” Juncker said.

“I can’t imgaine that we would let the weekend pass without having solved the Cyprus problem,” the recently-departed Eurogroup chairman said.

The meeting will follow a second day of talks at the European Council summit in Brussels which has already discussed concerns over the impact of austerity on growth.

As thousands protested over European unemployment, which stands at nearly 26 million, outgoing Italian prime minister Mario Monti urged his peers to allow Italy, and other countries facing public finance pressures, to spend in order to create more jobs.

‘Reconfirmed our overall economic strategy’

Without that, he warned, there would be a voter backlash such as the one he suffered last month. Flexibility as opposed to rigid austerity “would be the best message to counter the mounting wave of populism and disaffection with the EU,” he underlined.

A brash anti-austerity party won a stunning 25 per cent of the vote in last month’s Italian elections, a warning for German Chancellor Angela Merkel who faces a general election in September.

However, Merkel’s polling position has rarely been stronger, and at the close of the first session of the two-day summit talks on the economy, she said the benefit of Monti’s reforms would be seen in the fullness of time.

EU President Herman Van Rompuy said the leaders meeting in Brussels had “reconfirmed our overall economic strategy.”

Amid heavy security, the summit coincided with an anti-austerity rally nearby that organisers said drew 15,000 demonstrators, during which dozens were arrested after breaking into a building adjacent to the venue.

This morning the EU summit will turn to the question of a call by French president Francois Hollande to lift a bloc arms embargo on Syria, in order to help insurgents fighting the regime of President Bashar al-Assad.

France is ready to “take its responsibilities” and supply weapons to Syria’s rebels if it cannot convince its European partners to lift an arms embargo, Hollande said.

The French president talked tactics beforehand with British Prime Minister David Cameron beforehand, Hollande vowing: “We are ready to support the rebellion.”

Relations with key partner Russia will also be addressed.

- additional reporting from AFP

Read: MEPs shoot down leaders’ proposals for seven-year EU budget

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