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EU Nixes Blanket Bailout For Its Ailing Eastern Nations

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The Associated Press

Published: March 2, 2009

BRUSSELS - German Chancellor Angela Merkel and other EU leaders flatly rejected a new multibillion-dollar bailout for eastern Europe on Sunday, suggesting that additional aid be given to struggling nations on a case-by-case basis.

Germany and the Netherlands also shot down suggestions 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 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," said Merkel, 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 that threatened to rend Europe.

Noting that eastern members were being hit the hardest, he suggested setting up an EU fund of up to $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, which 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.

OBAMA TO VISIT EUROPE

President Barack Obama will meet with European Union leaders at a special summit in April during his first trip to Europe, an official said Sunday.

Czech Prime Minister Mirek Topolanek, who currently holds the EU presidency, said Obama has accepted the invitation to visit Prague, the Czech capital, on April 5 to meet with all 27 EU leaders.

The Czechs had been pushing hard to get Obama to visit Prague during his trip to Europe, where he will attend a Group of 20 summit in London on April 2, and a NATO summit held jointly by the neighboring cities of Strasbourg, France, and Kehl, Germany, on April 3.

The Associated Press

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