Merkel rejects East European bailout plan

Source: Xinhua | 03-02-2009 08:25

BRUSSELS, March 1 (Xinhua) -- German Chancellor Angela Merkel on Sunday rejected calls of East European member states of the European Union (EU) for a multibillion-euro (multi-billion-U.S.-dollar) bailout plan.

The situation is different from country to country in Eastern Europe, Merkel told reporters upon arrival for an informal EU summit.

"The situation is very different ... We cannot compare Slovakian or Slovenia with Hungary," she said.

Hours before the emergency EU summit, leaders from nine Central and Eastern European countries met separately to work on a common position against the rise of protectionism.

Hungarian Prime Minister Ferenc Gyurcsany called for a special EU fund of up to 190 billion euros (241 billion U.S. dollars) to bail out Central and Eastern European countries.

With the economic situation deteriorating in Eastern Europe, there is a mounting concern that a collapse of Eastern European economies could trigger further instability across the continent.

"We should not allow a new iron curtain to be set up and divide Europe in two parts," Gyurcsany told reporters ahead of the summit.

Hungary was among the worst hit Eastern European countries in the financial crisis. Together with Latvia, the country has been forced to seek financial support from the International Monetary Fund (IMF).

"This is the biggest challenge for Europe in the last 20 years. In the beginning of the nineties we reunified Europe, now the challenge is whether we will be able to reunify Europe financially," Gyurcsany said.

The extraordinary EU summit was called when protectionism looms large within the 27-nation bloc. Split appeared between Eastern and Western European countries after the latter resorted to protectionist measures to save their industries from the worst economic crisis in decades.

"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-neighbor policy is unacceptable," Czech Prime Minister Mirek Topolanek, whose country holds the EU rotating presidency, said.

The Czechs have been particularly incensed by French plans to offer public aid to carmakers Renault and Peugeot-Citroen on condition that they will commit not to lay off French workers, a condition seen as threatening jobs of workers in factories owned by the French automakers in Eastern Europe.

Editor:Zhang Pengfei