But EU countries are deeply divided over how to bolster growth and respond to the influx of migrants.
Meeting in Bratislava without the UK, they will not discuss Brexit talks.
"We need solutions for Europe and we are in a critical situation," Mrs Merkel said as she arrived at the gathering.
"You can`t solve all Europe`s problems in one summit. What we have to do is show in our deeds we can do things better in the realms of security and fighting terrorism, and in the field of defence."
`Brutally honest`
Even though Britain`s referendum result is not on the agenda, and British Prime Minister Theresa May is not attending the summit, there is little doubt that Brexit will overshadow the meeting.
French President Francois Hollande said: "Either we move in the direction of disintegration, of dilution, or we work together to inject new momentum, we relaunch the European project."
Donald Tusk is hoping for a public show of unity among the 27 nations of the EU following Britain`s vote to leave in June.
Mr Tusk wants to restore EU stability and credibility with the bloc in the face of a migrant crisis and issues with the euro currency. But European leaders are divided, their voters sceptical.
Central and Eastern Europe want powers back from Brussels. Northern nations view the south as a eurozone liability. Mediterranean countries balk at German austerity edicts.
So on Friday they will stick to subjects they agree on and those they feel are relevant to voters` concerns: migration, security and globalisation.
The hard stuff, such as a future trade deal with Britain and how to save the single currency, will be left for another day.
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