The Good: Leadership in EU rejects bailout for eastern members

BRUSSELS — German Chancellor Angela Merkel and other EU leaders flatly rejected a new multibillion euro bailout for eastern Europe on Sunday, suggesting that additional aid be given to struggling nations only 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. French President Nicolas Sarkozy said the EU could look at reviewing the stringent euro currency membership criteria and two-year waiting period once the 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 said a one-size-fits-all bailout was unwise. “You cannot compare” the dire situation in Hungary with that of other countries, Merkel said.

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 euro190 billion, or $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 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. Hungary’s plan was quickly shot down.

EU Commission President Jose Manuel Barroso said eastern European countries 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.

Gyurcsany warned that failure to offer bigger bailouts “could lead to “large-scale defaults” that would affect Europe as a whole.

Sunday’s summit was the first of three high-level talks that EU leaders have planned to forge a common strategy to combat the worsening recession. Vague statements issued by the leaders hardly appeared a unified stance .

http://www.chron.com/disp/story.mpl/headline/world/6288831.html

The Good: Leadership in EU rejects bailout for eastern members

The Good: Leadership in EU rejects bailout for eastern members

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