Who sets the European Union’s agenda? This question has been causing anguish in Europe and confusion abroad as the EU attempts to figure out which leader counts in the Lisbon treaty puzzle. One answer is that the bond markets are the agenda-setters. The Greek debt crisis and fears of financial contagion have hijacked the agenda of today’s ‘library’ summit.

This week speculation intensified over how Greece would meet €20 billion of sovereign debt that comes due in April or May. The European Commission and the European Investment Bank have previously denied reports that they will step in with loans or guarantees. But the eurozone is not as isolated as EU policymakers might like to pretend. German and French banks are exposed, holding too many Greek government bonds.

So much for European Council President Herman Van Rompuy’s plan for a freewheeling exchange on the EU’s new ten-year plan to boost growth and jobs and swap ideas on climate diplomacy.

The fate of the euro has forced its way onto the agenda. The summit has, at the very least, to come up with a united line on the eurozone, to snuff out fears of contagion. It may yet have to come up with a plan to rescue Greece.

So why has the Greek debt crisis taken over and why now? The reasons have their roots in genuine, long-standing problems – the state of the Greek economy and the mystery of eurozone governance (who is the lender of last resort?). But this is also a confected crisis.

The rotten state of Greek public finances is real enough. If the figures can be relied upon (which they cannot), Greece has a budget deficit of 12.7% of gross domestic product, the largest in the eurozone, while its public debt as a ratio of gross domestic product weighs in at 113%. Announcing an austerity package last week (3 February), the Greek government promised to bring down its deficit to within 3% of GDP by 2012. So far, street protests have been small by Greek standards, but they reflect a strand of public discontent that could spell difficulty for the government if it is to maintain support for deep spending cuts and structural reforms.

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The problems elsewhere in the eurozone are also real. The budget deficits in Ireland and Spain are also alarmingly high. Debt in Italy is at similar levels to Greece’s. But it is the combination of problems that makes Greece a special case, as well as the scheduling of its debt repayment.

Timing, in economic as in politics, is crucial. And, in this case, artificial. Speculation, especially global contracts betting, has surged in the last week as the markets look for weakness in the eurozone’s southern fringes. That the EU’s leaders are meeting today (11 February) has generated expectations among investors, aided by talk of emergency help from some German government sources.

The Commission and other national leaders of the EU would prefer to give the Greek government time to put its austerity plan into effect. When they approved the plan last week, the Commission and the European Central Bank said that Greece was on the right track and talked down expectations of an emergency loan. Why should they – or, more accurately, thrifty Germans – be forced to underwrite Greek debt to calm frothy speculation in the markets?

Investors react with indignation against such suggestions that speculation is the problem. The markets have the right to express a negative opinion, they say. Moreover, it could be argued that the markets are doing these economies a service. The spread on Greek or Portuguese government bonds tells a harsh underlying truth about these economies.

Up to a point. The problems of the eurozone’s southern countries are undeniable and have been exacerbated by uncertainty about who pays for a fiscal crisis in a currency union, but markets do not behave rationally.

Joseph Stiglitz, the Nobel-prize-winning economist who has been doing the rounds as an adviser to the Greek government, this week spoke out against the myth of the rational investor. “The market is subject to irrational optimism and pessimism, and is vindictive. If there is a speculative attack against you, it is not an issue of appeasement but a judgement about whether they can break your back.”

That is the test that the eurozone’s leadership is now undergoing. The economic governance of the eurozone should have been sorted out before now. It is unfortunate, but not surprising (because it is the EU’s way), that the questions are to be debated in the midst of a crisis.

To some critical eyes, speculation around the eurozone’s southern countries reinforces the case for a global tax on financial transactions, a so-called Tobin tax, which is being rebranded as a Robin Hood tax. EU leaders such as Nicolas Sarkozy and Gordon Brown have already come out in favour of such a tax, although the International Monetary Fund dismissed it last year as “a very old idea that is not really possible today”. A Tobin tax would not solve the eurozone’s problems, though it would suggest that EU leaders were prepared to face off speculators in the markets.

But what it will not do is buy Greece time.