Czech PM urges EU leaders not to “beggar thy neighbour”

BRUSSELS – "Europe will only overcome the crisis if we act together in a coordinated way and if we abide by the Community rules," said Topolanek, whose country holds the EU’s rotating presidency.

"We do not want any new dividing lines; we do not want a Europe divided along a North-South or an East-West line; pursuing a beggar-thy-neighbour policy is unacceptable," he added in a pre-summit statement.

"That the internal market remains united is of vital importance."

The leaders at the EU summit, the first of two in March dedicated to the economy, are hoping to patch over their differences and avoid a crisis of confidence in the bloc’s single market.

They also to display a united front at an upcoming G20 meeting in London.

At the informal summit in Brussels on Sunday, the 27 EU heads of states and government should acknowledge "that for the fiscal stimuli adopted by the member states to be efficient it is essential to unlock the frozen credit flows," Topolanek stressed.

The summit comes amid growing fears, particularly from eastern European nations, that their western partners are putting the communal good on the back burner as they roll out protectionist state aid programmes for ailing sectors.

In a sign of the divisions, nine of the eastern partners will attend a pre-summit meeting in Brussels Sunday morning seeking a common line decrying protectionism and urging more solidarity in the face of the kind of serious liquidity problems faced by Hungary and Latvia.

In a move to ease the tension, the EU Commission on Saturday declared itself satisfied with guarantees from Paris that the French plan to boost its ailing auto sector is not protectionist.

French Secretary of State for Industry Luc Chatel sent a letter to EU Competition Commissioner Neelie Kroes stating that French authorities "have undertaken not to implement aid measures to the automotive sector that would contravene the principles of the internal market," a statement said.

"I am satisfied with the guarantees set out by the French authorities on the absence of protectionist elements in the plan for aid to the automotive sector," Kroes said.

President Nicolas Sarkozy this month announced plans to lend PSA Peugeot Citroen and Renault three billion euros (3.9 billion dollars) each and other measures in exchange for a promise not to shut French plants or move to cheaper sites "in the Czech Republic or elsewhere".

"All efforts and measures to fight the economic crisis within the EU must respect the principle of solidarity, but they also require that all players show responsibility," Topolanek said in his statement Saturday.

A draft summit statement, prepared for the EU leaders, echoed Topolanek’s plea for credit to flow and underlined the single market is "the engine for recovery, to support growth and jobs."

The draft statement, seen by AFP, also states that European nations should "ensure that the EU’s internal efforts and actions to restore financial stability and to promote open markets are adequately reflected at the international level" — a look forward to the G20 meeting.

The European Commission has tried to keep the bloc in step, decrying national economic protectionism on the one hand while showing more tolerance to state bailout schemes on the other.

The car sector is a particularly high-stakes area and France is not alone in seeking to shore it up

One of the worst hit by the recession which has seen unemployment rise and consumer and business confidence fall, it is also one of Europe’s biggest employers, with 12 million jobs at stake.

AFP / Expatica