EU crisis summit will tackle protectionism fears

28th February 2009, Comments 0 comments

The European Commission will champion a common EU approach on "toxic assets" held by banks and stricter monitoring of financial markets.

Brussels -- EU leaders will hold an extraordinary summit on Sunday, seeking to tackle rising fears over economic protectionism and agree more coordinated action to tackle the deepening recession.

The European Commission will champion a common EU approach on "toxic assets" held by banks and stricter monitoring of financial markets.

The meeting will be the first of two March EU summits in Brussels dedicated to the economic meltdown, as inflation and interest rates fall while unemployment rates and government bail-outs increase.

European consumer and business confidence was recorded at a record low in February.

The heads of Europe's largest economies agreed Sunday on the need for greater regulation of financial markets and to double IMF funding to avoid a repeat of the global economic crisis.

The leaders of Britain, France, Germany, Italy, Spain and the Netherlands hope those ideas will be echoed at the upcoming EU summits and the key Group of 20 meeting of developed and developing countries in London on April 2.

However it is the state bailouts that have threatened the unity, with the ailing auto sector at the centre.

European Commission head Jose Manuel Barroso and Czech Prime Minister Mirek Topolanek have this week urged the European leaders to commit to the fight against protectionism.

Topolanek, whose country holds the rotating EU presidency, spoke of "an unprecedented crisis," in a letter sent to his 26 fellow EU leaders.

The heads of state and government must stress "our commitment to facing the challenges posed by the crisis by continuing to act together, in a cooperative and coordinated manner," he added.

At the informal summit in Brussels on Sunday the leaders should discuss "the means required to support our industries, including the automotive sector, while ensuring a level playing field," Topolanek stressed.

The Czech Republic is one of nine central and eastern European countries whose leaders are set to meet hours ahead of the full EU summit, at Poland's request, seeking a firm voice in the larger forum.

The ailing automotive sector is a particular bone of contention after Britain, France, Germany, Italy, Spain and Sweden announced various national bailout packages for their own carmakers. Some of the aid is designed to keep jobs at home.

Barroso, who will attend both summit meetings on Sunday, echoed Topolanek's line in his own letter to EU leaders.

"One of our key messages should be the expression of our shared commitment to openness," he said, again evoking the sought-after "level playing field, both within the European Union and globally."

Local currencies in central and Eastern Europe have plummeted in value, industrial output has plunged and once-buoyant economies have shriveled -- all in a region much-praised for its economic progress since the fall of the Berlin Wall in 1989.

In a particularly gloomy assessment for the region, French bank BNP Paribas warned in a research note recently that "several CEE (Central and East European) countries seem to be on the verge of collapse."

Hungary, Latvia and Ukraine are all receiving billions of euros (dollars) from the IMF to help their economies cope with the crisis. And officials say they will need many billions more to shore up their banking systems.

Polish Foreign Minister Radoslaw Sikorski championed the free market values this week in a rallying cry to the eastern EU nine; Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia.

"I hope the meeting will express support to the commission as the keeper of the free flow of people, goods and services," said Sikorski. "We have to be particularly vigilant about protectionism."

Earlier this month Topolanek accused French President Nicolas Sarkozy of protectionist measures which "may slow down and threaten the revival of the European economy."

A more collegiate Sarkozy on Thursday called for a "global plan of support" for the auto industry.


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