Europe seeks unity for crunch G20 meeting

20th February 2009, Comments 0 comments

Squabbles behind the scenes over protectionism may hinder efforts to present a united European front before American President Barack Obama's first trip to the continent for the meeting.

Berlin -- Leaders from major European economic powers will seek Sunday to put recent disagreements behind them and forge a common position on the financial crisis ahead of April's key G20 summit in London.

But squabbles behind the scenes over protectionism may hinder efforts to present a united European front before American President Barack Obama's first trip to the continent for the April 2 meeting, analysts said.

As European members of the Group of 20 advanced and developing economies, the leaders of Britain, France, Italy and Spain will join the talks in Berlin hosted by German Chancellor Angela Merkel.

The European Union -- also a member of the G20 -- will be represented by European Commission President Jose Manuel Barroso. Dutch Prime Minister Jan Peter Balkenende and Eurogroup chairman Jean-Claude Juncker are also invited.

European Central Bank President Jean-Claude Trichet and Mirek Topolanek, prime minister of the Czech Republic, which currently holds the rotating EU presidency, complete the high-powered line-up.

Top of the agenda at the talks will be reforming global financial regulation and international economic institutions in the wake of the banking crisis that has plunged Europe into a deep recession.

Britain's Prime Minister Gordon Brown, who will chair the April meeting, set the tone Wednesday, calling for a "grand bargain" between world powers to deal with "a global problem that can only be solved with a global solution."

London's priorities for the April summit include kick-starting lending, renouncing protectionism, reforming global financial regulation and acting against tax havens, according to a preparatory report published Wednesday.

But behind what is likely to be a public face of unity in Berlin, leaders have voiced concern over French plans to lend carmakers billions of euros (dollars) on condition that they keep jobs and assembly lines in France.

French President Nicolas Sarkozy's plan is viewed by many in Europe as exactly the sort of protectionism that should be avoided.

Following a meeting with Merkel on Thursday, Barroso said: "If one country takes a decision that is harmful for another member country, it is not good," adding that this would "destroy jobs."

He also said that Europeans would aim to make clear on Sunday that "protectionism is not the answer to the crisis ... protectionism will only make the crisis worse."

Topolanek took a swipe at Sarkozy's plan on Tuesday, saying: "Europe is facing protectionism, populism, a lack of solidarity, finger pointing, punishing the innocent and rewarding the unnecessary."

Aurelio Maccario, chief euro zone economist at Italian bank UniCredit, said the French plan is likely to cause tensions at the meeting.

"I heard and I read that behind closed doors, discussions are very, very, very lively," he told AFP.

In public, however, leaders are poised to repeat a commitment to avoid resorting to protectionism as a response to the world financial crisis.

They may also discuss Obama's 787-billion-dollar stimulus plan to jump-start the American economy, which has raised fears in some quarters over protectionism.

Politically, the gathering will also seek to draw a line under an apparent snub to Merkel, who was not invited to a similar preparatory meeting last December in London ahead of an EU summit.

In addition, Sarkozy and Topolanek will hold a bilateral meeting in a bid to lay to rest rumours that the two do not see eye-to-eye.

"I am ... personally looking forward to speaking to Nicolas," Topolanek said on Wednesday. "I hope that our meeting will put an end to media speculation that we have difficulty finding common ground."

In any case, European leaders will not be short of opportunities to chew the cud before the London talks as two EU summits are planned in Brussels in March.

Ahead of Sunday's meeting, German Finance Minister Peer Steinbrueck sought to play down expectations, warning: "We have to be careful with this quick succession of summits that we do not raise hopes that can not be fulfilled."

However, expectations appear to be low enough -- at least on the part of economists -- for Sunday's meeting.

"I expect basically nothing relevant," said UniCredit analyst Maccario.

"I don't think there will be concrete action," agreed Holger Schmieding, senior economist at Bank of America.

Richard Carter/AFP/Expatica

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