EU leaders meet this WEEK

The part on banking union - seen as key to ensuring the future stability of the eurozone - will depend on what finance ministers manage to hammer out during their meeting earlier in week. Ministers loosely agreed a framework on how ailing banks should be wound down and how a common fund would eventually be set up. However, there are concerns about its proposed intergovernmental nature and complex decision-making procedure.

Meanwhile finance ministers may revisit the savings tax directive - after Austria and Luxembourg continued to block agreement last week - earning themselves criticism from other member states and the European Commission.

EU leaders are also due to examine where all countries are with the implementation of a scheme to help get young people into jobs or training. The initiative was announced by the European Commission a year ago but progress on getting it into place - requiring fundamental changes in some member states - has been slow.

Defence is the headline theme of the EU summit - put on the agenda by council president Herman Van Rompuy.

The draft conclusions promise member states will make a "strong commitment for the further development of a credible and effective" common defence policy.

Among the few concrete steps is a call for an EU cyber defence policy framework next year and the adoption of a maritime security strategy in June.

EU leaders are also set to welcome "concrete cooperative projects" to work on drones in the "2020-2025" timeframe, the development of air-to-air refueling capacity as well as preparation for the next generation of satellite communications.

Foreign ministers will gather in Brussels on Monday with Ukraine featuring high on the agenda. The EU has admitted it has lost patience with Kiev amid apparent attempts by President Viktor Yanukovych to play Brussels and Moscow - also keen to get Ukraine within its sphere of influence - off one another.

"Told Arbuzov that further discussion is conditioned on clear commitment 2sign. Work on hold, had no answer," EU enlargement commissioner Stefan Fuele tweeted Sunday.

"Words and deeds of president and government further and further apart. Their arguments have no grounds in reality."

Russian foreign minister Sergei Lavrov is also due to attend the meeting for what is expected to be heated exchange on the developments of the past weeks - a period that saw Ukraine refuse to sign a deal on deeper ties with the EU. Ukrainian citizens have protested in their thousands in Kiev against the decision.

Setting the tone of the meeting, Lavrov commented over the weekend that the EU's reaction to Ukraine's cold shoulder was “bordering on hysterical."

German Chancellor Angela Merkel is due to visit French President Francois Hollande in Paris on Wednesday. The visit will come shortly after Merkel's governing coalition is to receive the formal go-ahead following elections in September.

Relations between the Paris and Berlin are cool, exacerbated by the two countries different economic fortunes - with France suffering from stagnating growth and high unemployment. The two sides also differ on the future development of economic and monetary union.

The European Commission is due Wednesday to adopt new state aid rules. A new draft regulation would automatically exempt a number of state aid measures from falling foul of EU rules - particularly if the government funding is meant to help achieve the EU2020 economic goals.

Meanwhile the commission's competition unit is set to open an investigation into planned British support for a new nuclear power plant in south west England.

The UK is the first government to ask for the commission green light for its support for nuclear power. Brussels' decision on the matter will be watched closely by other EU governments.