Tuesday

10th Dec 2019

Financial crisis threatens east-west divide in EU

Eastern European member states' fears that they will be left behind by richer EU members in the economic crisis are growing ahead of the informal EU summit on Sunday (1 March).

Poland, the Czech Republic, Slovakia, Hungary, Lithuania, Latvia, Estonia, Romania and Bulgaria are hoping to pull Germany, the Netherlands and Nordic states into a coalition opposing the creation of "eurobonds," Polish officials told daily Gazeta Wyborcza.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

"We want to block the potential eurobond project. To do everything to prevent a two-speed Europe. The introduction of eurobonds for the eurozone only would mean precisely this," Polish deputy prime minister Grzegorz Schetyna said on Wednesday.

A eurobond is a government I.O.U. guaranteed by all 16 members of the single currency group.

The creation of eurobonds would help poorer eurozone members, such as Greece, borrow money more cheaply. But it could make the cost of borrowing go up for the 11, mostly eastern European states, outside the club.

The eurobond idea was floated by Italian finance minister Giulio Tremonti at the Davos economic forum in January and has since been publicly backed by the International Monetary Fund.

Italy has the highest public debt in the eurozone, prompting a rise in the cost for borrowing money on the bond market as investors fear a default.

German finance minister Peer Steinbruck and Carl Heinz Daube, the head of the German debt-issuing agency, the Bundesrepublik Deutschland Finanzagentur, are eurobond sceptics, however.

Leaders from the group of nine eastern EU states will hold a pre-summit meeting together with European Commission president Jose Manuel Barroso at the Polish diplomatic mission in Brussels on Sunday morning.

Polish prime minister donald Tusk will also meet German chancellor Angela Merkel in Hamburg on Friday.

French, Italian and Spanish plans to pump billions into national car industries have also raised worries that western EU states will try to spend their way out of the crisis, no matter what the damage to single market principles.

The fears strike at the heart of the post-2004 enlargement EU project, with former-Communist countries seeing the union as a chance to catch up economically after 60 years of unjust isolation.

"The Brussels summit must show that, while the crisis is hitting individual countries in various ways, the union speaks with one voice. That there is no division into better or worse [EU states]," Polish Europe minister Mikolaj Dowgielewicz told the Polish daily.

"The crisis cannot be an excuse for dismantling the single market."

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Interview

EU Africa envoy: Europe needs to look beyond migration

Europe's obsession with migration from Africa means it risks losing out the continent's potential when it comes to trade, says the EU's ambassador to the African Union, Ranier Sabatucci. "Africa is a growing continent, it is the future," he says.

EU agrees 2020 budget deal

EU governments and the parliament agreed in marathon talks ino next year's budget - which will boost spending on climate, border protection, and the European satellite system. It will also be a benchmark if there is no long-term budget deal.

EU and China agree to defend 'gastronomic jewels'

Manchego cheese, Panjin rice and Polish vodka will all be protected under a new EU-China agreeement. But the two trading giants continue to struggle over other trade-related deals.

News in Brief

  1. MEPs: Finnish budget proposal 'impossible to implement'
  2. EP committee supports 'Future of EU Conference'
  3. EU survey: climate change must be parliament's priority
  4. Zahradil resigns as rapporteur on EU-Vietnam trade deal
  5. Russia plans 'Arctic Air Defence" with S-400 missiles
  6. Belgium: King does another round of consultations
  7. Thousands protest Orban's theatre clampdown
  8. Russia and Ukraine agree ceasefire by new year

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Join EUobserver

Support quality EU news

Join us