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EU REJECTS 190 BILLION EURO BAILOUT FOR EASTERN EUROPE
PanARMENIAN.Net
02.03.2009 11:27 GMT+04:00
/PanARMENIAN.Net/ German Chancellor Angela Merkel and other EU leaders
have flatly rejected a new multibillion euro (dollar) bailout for
Eastern Europe, suggesting that additional aid be given to struggling
nations only on a case-by-case basis.
Germany and the Netherlands also shot down suggestions at the
one-day EU summit that Eastern European countries that have seen
their currencies plummet be given a quick entry to the euro, which
has remained strong against the U.S. dollar and Japanese yen. But
French President Nicolas Sarkozy said the EU could look at reviewing
the stringent euro currency membership criteria and two-year waiting
period once the global economic crisis ends.
Germany, the region's largest economy, has been under rising pressure
to take the lead in rescuing Eastern EU members staggering from
sinking currencies, shrinking demand for exports and rising debt,
but Chancellor Angela Merkel insisted a one-size-fits-all bailout
was unwise.
"Saying that the situation is the same for all central and eastern
European states, I don't see that," Merkel said Sunday, adding
"you cannot compare" the dire situation in Hungary with that of
other countries.
That tough stance came even as Hungarian Prime Minister Ferenc
Gyurcsany warned that the global credit crunch was creating a widening
economic chasm in the 27-nation bloc which threatened to rend Europe.
Noting that eastern members were being hit the hardest, he suggested
setting up an EU fund of up to â~B¬190 billion ($241 billion) to help
restore trust and solvency in eastern members.
"We should not allow that a new Iron Curtain should be set up and
divide Europe," Gyurcsany told reporters.
Eight other EU nations had joined Hungary in vowing to pressure richer
members to back up vague pledges of support with action - Poland,
Slovakia, the Czech Republic, Bulgaria, Romania and the three Baltic
states. But Hungary's plan was quickly shot down by Germany and others,
who balked at the costs.
EU Commission President Jose Manuel Barroso said Eastern European
countries already were getting billions in emergency rescue funds and
loans from the EU, the World Bank and other financial institutions
and did not need a sweeping new bailout plan.
He said the EU has â~B¬25 billion ($32 billion) in reserve to help
member nations. It already gave â~B¬9.6 billion of that to Hungary
and Latvia, the first EU government to fail because of the global
economic turmoil.
Gyurcsany acknowledged that other EU leaders had questioned his plan
but insisted they would study it. "If you are speaking about Europe
and you are facing this type of complicated challenge, you have
to respond in a way not just concentrating on independent nations,
but some regions as well," he said.
Gyurcsany said Eastern EU countries could need up to â~B¬300 billion
($380 billion), or 30 percent of the region's gross domestic product
this year. He warned that failure to offer bigger bailouts "could
lead to massive contractions" in eastern economies and "large-scale
defaults" that would affect Europe as a whole because of political
unrest and immigration pressures.
Czech Prime Minister Mirek Topolanek, who chaired Sunday's talks,
promised that the EU would not leave any nation "in the lurch."
Some EU nations - notably Hungary, Poland and the Baltic countries
of Estonia, Latvia and Lithuania - had urged the bloc to consider
making it easier to join the euro currency. The 16-nation currency
has so far proved a stable financial anchor in turbulent markets.
Polish Prime Minister Donald Tusk said his country did not support
changes in criteria for joining the euro, but said it favors shortening
the time prospective members are required to stay in an exchange rate
mechanism, which demands low and controlled inflation, healthy public
finances and a budget deficit below 3 percent of GDP.
Current rules set out a minimum two-year waiting period. "This is
not a Polish initiative, but we would welcome it," Tusk said.
Other EU states said existing economic requirements for joining the
shared currency should not be relaxed.
Dutch Premier Jan Peter Balkenende joined Merkel in rejecting
a "softening" of euro membership criteria that would allow
weaker economies to join and possibly damage the strength of the
currency. Balkenende said if a nation wants to join "it must meet
the minimum economic criteria."
Sunday's EU summit was the first of three high-level talks EU leaders
have planned to forge a common strategy to combat the worsening
recession. Yet vague statements issued by the leaders hardly appeared
to amount to a unified stance.
French and German leaders made separate calls for more EU funds to
keep European car makers alive and insisted those subsidies would
not be protectionist.
Merkel and Sarkozy called EU subsidy guidelines too stingy and said
they needed to be updated. Sarkozy welcomed EU regulators' approval
of France's â~B¬7 billion ($8.95 billion) in loans for Renault and
Peugeot Citroen PSA, which came only after France said it would not
require the two to buy from French suppliers or safeguard jobs at
French plants, the IHT reports.
PanARMENIAN.Net
02.03.2009 11:27 GMT+04:00
/PanARMENIAN.Net/ German Chancellor Angela Merkel and other EU leaders
have flatly rejected a new multibillion euro (dollar) bailout for
Eastern Europe, suggesting that additional aid be given to struggling
nations only on a case-by-case basis.
Germany and the Netherlands also shot down suggestions at the
one-day EU summit that Eastern European countries that have seen
their currencies plummet be given a quick entry to the euro, which
has remained strong against the U.S. dollar and Japanese yen. But
French President Nicolas Sarkozy said the EU could look at reviewing
the stringent euro currency membership criteria and two-year waiting
period once the global economic crisis ends.
Germany, the region's largest economy, has been under rising pressure
to take the lead in rescuing Eastern EU members staggering from
sinking currencies, shrinking demand for exports and rising debt,
but Chancellor Angela Merkel insisted a one-size-fits-all bailout
was unwise.
"Saying that the situation is the same for all central and eastern
European states, I don't see that," Merkel said Sunday, adding
"you cannot compare" the dire situation in Hungary with that of
other countries.
That tough stance came even as Hungarian Prime Minister Ferenc
Gyurcsany warned that the global credit crunch was creating a widening
economic chasm in the 27-nation bloc which threatened to rend Europe.
Noting that eastern members were being hit the hardest, he suggested
setting up an EU fund of up to â~B¬190 billion ($241 billion) to help
restore trust and solvency in eastern members.
"We should not allow that a new Iron Curtain should be set up and
divide Europe," Gyurcsany told reporters.
Eight other EU nations had joined Hungary in vowing to pressure richer
members to back up vague pledges of support with action - Poland,
Slovakia, the Czech Republic, Bulgaria, Romania and the three Baltic
states. But Hungary's plan was quickly shot down by Germany and others,
who balked at the costs.
EU Commission President Jose Manuel Barroso said Eastern European
countries already were getting billions in emergency rescue funds and
loans from the EU, the World Bank and other financial institutions
and did not need a sweeping new bailout plan.
He said the EU has â~B¬25 billion ($32 billion) in reserve to help
member nations. It already gave â~B¬9.6 billion of that to Hungary
and Latvia, the first EU government to fail because of the global
economic turmoil.
Gyurcsany acknowledged that other EU leaders had questioned his plan
but insisted they would study it. "If you are speaking about Europe
and you are facing this type of complicated challenge, you have
to respond in a way not just concentrating on independent nations,
but some regions as well," he said.
Gyurcsany said Eastern EU countries could need up to â~B¬300 billion
($380 billion), or 30 percent of the region's gross domestic product
this year. He warned that failure to offer bigger bailouts "could
lead to massive contractions" in eastern economies and "large-scale
defaults" that would affect Europe as a whole because of political
unrest and immigration pressures.
Czech Prime Minister Mirek Topolanek, who chaired Sunday's talks,
promised that the EU would not leave any nation "in the lurch."
Some EU nations - notably Hungary, Poland and the Baltic countries
of Estonia, Latvia and Lithuania - had urged the bloc to consider
making it easier to join the euro currency. The 16-nation currency
has so far proved a stable financial anchor in turbulent markets.
Polish Prime Minister Donald Tusk said his country did not support
changes in criteria for joining the euro, but said it favors shortening
the time prospective members are required to stay in an exchange rate
mechanism, which demands low and controlled inflation, healthy public
finances and a budget deficit below 3 percent of GDP.
Current rules set out a minimum two-year waiting period. "This is
not a Polish initiative, but we would welcome it," Tusk said.
Other EU states said existing economic requirements for joining the
shared currency should not be relaxed.
Dutch Premier Jan Peter Balkenende joined Merkel in rejecting
a "softening" of euro membership criteria that would allow
weaker economies to join and possibly damage the strength of the
currency. Balkenende said if a nation wants to join "it must meet
the minimum economic criteria."
Sunday's EU summit was the first of three high-level talks EU leaders
have planned to forge a common strategy to combat the worsening
recession. Yet vague statements issued by the leaders hardly appeared
to amount to a unified stance.
French and German leaders made separate calls for more EU funds to
keep European car makers alive and insisted those subsidies would
not be protectionist.
Merkel and Sarkozy called EU subsidy guidelines too stingy and said
they needed to be updated. Sarkozy welcomed EU regulators' approval
of France's â~B¬7 billion ($8.95 billion) in loans for Renault and
Peugeot Citroen PSA, which came only after France said it would not
require the two to buy from French suppliers or safeguard jobs at
French plants, the IHT reports.