Thursday

20th Jan 2022

Eastern member states to hold own mini-summit

  • Poland has called for a mini-summit of eastern European states. (Photo: EUobserver)

The European Union's eastern members are to hold their own separate mini-summit ahead of an emergency summit of all EU premiers and presidents in order to co-ordinate their approach to the crisis.

Poland called the meeting in response to the larger, wealthier nations retreating into protectionist positions, particularly regarding their car sectors. It will take place in Brussels on 1 March on the morning of the wider summit to build a common front in defence of the single market.

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"We want to send a clear message that we support the European Union's position in favour of defending the common market and that we are against protectionism," Poland's Europe minister, Mikolaj Dowgielewicz, told Poland's PAP new agency.

France, Italy and Spain have in recent weeks each announced packages of billions of euros in public funds for their domestic auto industries.

The European Commission, normally quick to jump on such measures as market distortions, has said relatively little, although it is currently investigating Paris' €6 billion support measures for Renault and Peugeot-Citroen. Similar packages of public monies to support car companies in Italy and Spain are also under scrutiny.

The scrum of eastern nations will also consider the region's tottering banks, which have not been supplied with the re-capitalisation or loan guarantees that their western counterparts have been, as their governments have not been able to afford such moves.

Exacerbating the crunch in the east, the western parent banks of subsidiaries in the region have substantially reduced the credit available.

Western European banks have a financial engagement of some €1.1 trillion in the region, with Austria's financial institutions particularly exposed, being owed €220 billion - equivalent to around three quarters of the country's GDP.

Over the last fortnight, Vienna has been calling for a co-ordinated EU-level bail-out of the east out of fear its loans may not be able to be paid back.

Italy, Sweden, the Netherlands, France and Belgium are also among western Europe's big lenders to the east.

However, outside Hungary and the Polish Chamber of Commerce, Austria's request has fallen on deaf ears, and Germany, likely to get stuck with much of the tab for such action, has publicly said it is opposed to an eastern bail-out.

Speaking to reporters in Berlin on Sunday, Czech Prime Minister Mirek Topolanek hinted at a growing rift between the west and the east.

"Central and Eastern European countries [have] concerns about certain discrimination regarding for instance their access to financing by means of the European Central Bank," he said.

"There is certain fear that Europe - the old EU members and eurozone countries - may create a situation that will somehow secondarily affect Central and Eastern Europe," he continued, according to AFP.

European Commission President Jose Manuel Barroso is also to attend the eastern nations' mini-summit.

Separately, on Friday, the World Bank warned western EU member states not to deploy domestic counter-crisis measures that would hurt the economies of their neighbours to the east.

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