A month ago, the European Union leaders rejected a multi-billion dollar aid package for Eastern Europe. The heads of government from the EU’s 27 member states gathered at an emergency summit in Brussels, called by the Czech Republic, to discuss the latest challenges of the global economic turmoil and to find the right ways to tackle it.
The warning of a recession risk that could create a ‘new Iron Curtain’ dividing the continent came from Hungary’s prime minister Ferenc Gyurcsany. Hungary earlier called for a €180bn aid package for Central and Eastern Europe, which was rejected by the European Union leaders.
Germany’s Chancellor Angela Merkel opposed the bailout plan, insisting in an official statement that “the situation is very different in each EU country and one size fits all bailout is unwise”.
“The European Union’s paymasters – especially Germany – definitely think they have enough to do to bail out their own banks and industries,” said Harry Schneider, EU affairs lecturer at City University. “As the economic crisis bites more and more, the new Eastern European members of the EU will increasingly find that West European solidarity is wearing thin. It’s all a question of who will pay for any rescue package,” he added.
Earlier in February, French president Nicolas Sarkozy raised fears of protectionism by suggesting that French carmakers have to stop building plants out of France and start creating jobs at home.
“The fears that protectionism would divide Europe are relevant and they concern the long-running difference that exists between the French social and economic model and the more outward-looking free-trade oriented British and German ways of running the economy. Obviously it makes it more difficult for the EU to speak with one voice,” Mr Schneider said.
The EU leaders emphasized on their determination to avoid protectionism and concluded that the EU’s single market could be one of the solutions to the global recession.
“While Gordon Brown - going by his previous record - might be quite happy to let the few remaining UK motor manufacturing enterprises struggle for survival, Angela Merkel is under much greater compulsion to bail out the German car industry – even considering underhand protectionist devices,” said Schneider.
Now, almost a month later, the leaders came up with alternative EU aid packages for the struggling economies of the ex-communist countries.
Last week the European Union, IMF and World Bank bailed out Romania with a €20bn loan – the IMF put up €13bn, the EU €5bn and the World Bank €1bn. Before Romania, Hungary and Latvia received €9.6bn from Brussels.
But as the crisis deepens, should Bulgaria expect some ‘special’ funding to balance its financial difficulties and battle the economic downturn?..