EU looks to shore up unity at crisis summit (1st Lead)

Mar 1, 2009, 12:50 GMT

Brussels - European Union leaders were holding emergency talks in Brussels on Sunday in a bid to shore up the bloc's beleaguered unity in the midst of a damaging row over protectionism and fears that the EU may risk breaking into splinter groups.

The extraordinary summit was called by the Czech presidency of the bloc shortly after France signalled it wanted to protect its domestic car industry at the expense of plants in Central and Eastern Europe.

It comes amid growing uncertainty about the ability of several former-Communist states to weather the global credit crunch.

Sunday's lunchtime talks were preceded by a meeting of leaders from nine Central and Eastern European nations who made a strong call to reject protectionism.

'We all wish that Europe should avoid the temptation of protectionism and egoism. We wish that Europe be unified, a single market enjoying all the freedoms that are provided in the (EU) treaty,' Polish Prime Minister Donald Tusk summarized the talks.

Polish Europe Minister Mikolaj Dowgielewicz, whose country chaired the pre-summit meeting, rejected talk of a split within the 27-member bloc.

'This meeting is not against anybody or anything. It is about sending a very strong signal that the EU needs a robust and unified response to the crisis,' Dowgielewicz said.

Ahead of the talks, Hungary circulated a document calling for the creation of an EU fund of up to 190 billion euros (240 billion dollars) to keep crisis-hit countries in Eastern Europe from collapse. Hungary has been badly hit by the financial crisis, requiring support from the International Monetary Fund and the EU.

But there was little sympathy for the call, with Czech Premier Mirek Topolanek saying: 'I don't think there should be a special category 'Eastern Europe'.'

Such a view was reflected in a draft summit statement in which leaders were asked to call for financial assistance to be provided on 'a case-by-case basis'.

Estonia's premier, Andrus Ansip, also rejected the idea of an Eastern European bailout package, noting that unlike neighbouring Latvia, his country had accumulated enough reserves during the good times to survive the current crisis.

The draft being discussed by EU leaders also fails to address French and Italian calls for a European-wide rescue package for the automotive industry, stressing instead that the bloc's single market is 'the engine for recovery to support growth and jobs'.

As Swedish Prime Minister Fredrik Reinfeldt put it upon his arrival in Brussels: 'We should not be taking jobs from each other.'

And since the European car sector is suffering from overcapacity, it should be downsized in accordance with the EU's state aid rules, Reinfeldt said.

With governments having to raise public spending in order to mitigate the impact of the recession, EU leaders were also set to insist that budgetary discipline should be a long-term, rather than a medium-term, objective.

Sunday's informal meeting is the fourth EU summit to focus on the economic and financial crisis since October.

The talks come ahead of the bloc's regular spring council of March 19-20 and of a Group of 20 (G20) summit in London on April 2.

German Chancellor Angela Merkel arrived in Brussels 90 minutes late after her aircraft was forced to make an emergency landing in Hannover due to engine troubles.