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EU leaders struggle with divisions during crisis summit

Brussels — EU leaders struggled on Sunday to overcome divisions over the economic crisis as protectionism fears and appeals of help from poorer members prompted a warning of a "new iron curtain" in Europe.

Heads of state and government were holding an emergency summit in Brussels to thrash out a united front in the face of the worsening crisis after wrangling for weeks over what to do as Europe slips ever deeper into recession.

With eastern European countries particularly hard hit, Hungarian Prime Minister Ferenc Gyurcsany called for a new show of solidarity, recommending an international support fund for the region.

"We should not allow a new iron curtain to be set up and divide Europe in two parts," he warned, proposing a fund worth up to 190 billion euros (240 billion dollars).

That was far more than the 24.5 billion euros in aid that international institutions agreed on Friday to make available to eastern European countries to help them cope with the crisis.

German Chancellor Angela Merkel, who arrived late at the summit due to a technical problem with her plane, warned against lumping EU countries into groups.

Stressing that "the situation is very different" from one eastern European nation to another, she cautioned against launching into a debate on "massive figures" of aid for the region.

The financial and economic turmoil has clobbered eastern and central European countries particularly hard because their economies are highly dependent on a steady stream of credit from western sources, which has all but dried up recently.

While Austria has been urging measures to help Eastern Europe, most other countries, including the European Union’s current Czech presidency have ruled out special treatment for the region.

"I don’t believe that it is necessary now to separate several countries in the European Union," Czech Prime Minister Mirek Topolanek told journalists as he arrived to chair the emergency EU summit.

"I will support an individual approach of the European Union to help and support any countries or European countries, (and) not especially Eastern Europe."

Many eastern European countries are also growing increasingly concerned about the spectre of protectionism looming over Europe, especially after France made aid to its car sector conditional on companies not moving production to the region.

While the European Commission deemed the French auto package on Saturday to be free of protectionism, fears lingered on Sunday that as the crisis worsens governments will resort to bailing out their industries at the expense of other countries.

"Always we must resist the temptation of protectionism," Polish Prime Minister Donald Tusk told journalists after a pre-summit meeting of leaders from nine eastern European countries.

Swedish Prime Minister Frederik Reinfeldt said that in the specific case of the car industry bailouts did little to tackle the sector’s underlying problem of massive overcapacity in the face of collapsing consumer demand.

"It’s not possible with subventions to take jobs from each other without facing the main problem; the fact that we have an overcapacity on the manufacturing side."

According to a draft summit statement, the EU leaders will commit to putting their vast single market at the heart of their recovery plans and stress that the EU’s efforts to promote open markets are reflected elsewhere.

EU nations must "make the maximum possible use of the single market as the engine for recovery, to support growth and jobs," said the draft statement, seen by AFP.

EU leaders were also to use the summit to hammer out a common position to take to a meeting of leaders from the 20 biggest economic powers in London in early April.

Leigh Thomas/AFP/Expatica