WORLD> Europe
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WORLD> Europe
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EU leaders say no to protectionism
(Xinhua)
Updated: 2009-03-02 10:55 The ten eastern European nations who joined the EU since 2004 had been booming but the economic crisis has hit them hard with currencies falling, growth contracting and unemployment rising. Western media have likened the situation to that ahead of Latin America's financial collapse in the 1990s, jokingly referring to Hungary as "Argentina on the Danube." However, some in the region are faring better than struggling euro-zone nations such as Ireland, Greece or Portugal.
"But this idea of dividing up into new member states and old member states, euro-zone and non-euro-zone, or north against south, was an idea that was completely rejected," he added. Poland's call for nations to consider fast tracking eastern European nations into the euro to protect them against currency turbulence also found little support. Although Poland is one of those eastern nations that has coped with the crisis relatively well, the country has seen its currency the zloty fall by over 30 percent against the euro in recent weeks. Slovenia and Slovakia have entered the euro-zone but the EU's other eastern members do not meet the criteria of low inflation, public debt and budget deficits and current euro-zone nations are in no mood to risk the currency's stability by weakening the entry requirements. "I don't think we can change the accession criteria for the euro overnight. This is not feasible," said Luxembourg's Prime Minister Jean-Claude Juncker, who chairs the euro-group. The summit's resolute rejection of protectionism may have rung hollow if Sarkozy had not agreed Friday to go back on a previous plan linking 6 billion euros in aid to its auto industry to commitments to favor factories based in France over those in other European nations -- a plan seen in eastern Europe as a direct threat to local jobs and a violation of EU free market rules. However, pressure from the European Commission forced a climb down and on Friday. The EU's executive branch announced that Paris had made a commitment that the aid "will not contain any condition concerning either the location of their activities or the requirement to prioritize France-based suppliers." In return, Commission President Jose Manuel Barroso said the EU regulators would clear the French aid plan. Nicolas Sarkozy's call for a EU-wide aid package for the auto industry were not taken up with the leaders, leaving up to national governments to come up with support plans for their industry that must be tailored to EU rules on fair competition. The EU is predicting a record 20 percent contraction in the industry as the recession cuts into auto sales with fears growing daily for the jobs of 12 million Europeans employed in the industry. After coming up with a strong statement to reject protectionism and support greater banking supervision the Europeans will now aim to head into April's meeting of the G20 group of world economic powers in London with a united position. British Prime Minister Gordon Brown who will host that meeting said Europe had to take the lead in securing a "global grand bargain" to rescue the world economy. "Today was the start of a European consensus on all these major issues that are facing the world economy: yes to better regulation; yes to action on the shadow banking system and on hedge funds; no to protectionism; yes to fiscal and monetary stimulus," Brown told a news conference. He said the EU leaders also supported the IMF's goal of doubling the money it has available to bail out countries in trouble to $500 billion although he gave no indication that any offered to provide some of that emergency funding. Japan has pledged $100 billion to boost the help the Washington-based IMF. Brown said he would take the call for "bold global action" on the economy into his talks this week in Washington with new US President Barack Obama.
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