Economic crisis divides EU countries into rescuers and those needing rescue

Tens of billions of EU money to go to countries threatened by bankruptcy

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The economic crisis has begun to divide countries sharply into rescuers and those needing rescue - that is, between countries that distribute emergency loans and those that take them.
      This was easy to see at last week's EU summit, which concluded on Friday. EU leaders decided in principle to pump EUR 75 billion into the International Monetary Fund.
      The EU is also preparing to rescue countries outside the euro if their economic problems get worse.
      A decision was made to double the money of an assistance fund intended mainly for countries of Eastern and Central Europe, to EUR 50 billion.
     
Although the economic situation is getting worse, and a billion euros has of late become seen as small change, EU decision-makers were unexpectedly conciliatory at their summit.
      Contrary to all expectations, the economic crisis has improved the feeling of a common EU spirit. There was no bickering over small matters on Friday.
      “There was no ‘us vs. them’ setup”, said Minister for Foreign Affairs Alexander Stubb (Nat. Coalition Party).
     
The summit also decided on a common policy line for the G20 meeting to be held in London among the leading industrialised countries and developing countries.
      The view that was taken was not a surprise: no more additional stimulus is needed.
      “We were completely united and agreed that we are taking a very moderate view of additional stimulus”, said Mirek Topolánek, Prime Minister of the Czech Republic, the holder of the EU Presidency, after the meeting.
     
The member-states also want to double IMF funds to EUR 500 billion.
      Each member-state can decide on participation in the EUR 75 billion set for the EU. Finland’s share of the loan to be granted to the IMF is at least a billion euros.
      Prime Minister Matti Vanhanen (Centre) said on Friday that the EU expects the participation of other significant providers of funds in the IMF effort.
     
The EU civil service - the Commission - is responsible for augmenting the East European assistance fund to EUR 50 billion.
      However, a separate decision is required between the Union members and the European Parliament.
     
The fund has already provided loans for Latvia and Hungary. The money is not yet running out, but EU leaders want to make sure that there is sufficient funding before the European Parliament adjourns for the European elections in the late spring.
      Hungary has previously demanded a support package of EUR 180 billion for the new member-states.
      Behind the scenes at the summit there were moves to discuss ways in which badly-indebted countries of the euro zone might be supported. Special attention was paid to the economic plight of Ireland and Greece.
     
“That is a theoretical question. It will not happen”, said the leader of the 16 eurozone countries, Luxembourg’s Prime Minister Jean-Claude Juncker, with reference to the threat that Ireland and Greece might become insolvent.
      The EU leaders also emphasised that bank supervision should be upgraded immediately. The so-called De Larosière Group recently sent the EU a concrete proposal on implementing the supervision.
     
French President Nicolas Sarkozy said that the recommendations of De Larosière will be implemented in practice already this year.
      “Legislative decisions will come by the end of the year”, Sarkozy said.

More on this subject:
 Germany opposed “stress test” promoted by Vanhanen

Previously in HS International Edition:
  Finland to become net contributor in EU stimulus package (16.3.2008)

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