Please describe the problem:
A bug exists.

Steps to reproduce:
Run the following script:

#!/usr/bin/env python
# -*- coding: utf-8 -*-
import pangocairo
import cairo
very_ugly_kludge = False
def bugtest():
  surface = cairo.ImageSurface(cairo.FORMAT_ARGB32, 20, 20)
  context = pangocairo.CairoContext(cairo.Context(surface))
  layout = context.create_layout()
  txt = u'Ä'
  if very_ugly_kludge: txt = txt.encode('utf-8')
  layout.set_text(txt)
try: bugtest()
except UnicodeEncodeError:
  print 'Error: layout.set_text() does not accept unicode input'
else: print 'OK without gtk imported'
try: import gtk
except RuntimeError, reason:
  print "Can't import gtk, not testing further (gtk: %s)"%reason
else:
  try: bugtest()
  except UnicodeEncodeError:
    print ('Error: layout.set_text() does not accept unicode input '
           'even with gtk imported')
  else: print 'OK with gtk imported'

Actual results:
This output is printed:

Error: layout.set_text() does not accept unicode input
OK with gtk imported


Expected results:
This output should be printed:

OK without gtk imported
OK with gtk imported


Does this happen every time?
Yes, if the default encoding set in site.py is not utf-8.
It is not in the standard python distribution.

Other information:
Can be worked around by setting very_ugly_kludge to True.

This bug is related to bug 132040, which is about "import gtk"
changing default encoding to "utf-8", which it should not do.
Thus even in the case where "import gtk" has been done, the bug
still exists -- it is merely silent, and will appear when bug
132040 is eventually fixed.

Even if 132040 were decided not to be a bug, this should still be
fixed: requiring "import gtk" is not a solution, because the gtk
module requires a display, while pango and cairo themselves do not.