The European Union will hold an emergency economic summit this Sunday, but no major new initiatives are expected. The bloc’s traditional commitment to open markets and solidarity with poorer members are under pressure.
Brussels is urging governments to avoid protectionist measures aimed at shielding their national industries. The Czech EU presidency is also urging everyone to shun protectionism.
The European Commission, however, which monitors state aid rules, has said talks on some six billion euros in public loans to France’s car makers could produce results “very soon”.
Meanwhile, three development banks have agreed to provide rapid, large-scale financing to banks in central and eastern Europe, to ensure that companies are not starved of capital. A massive expansion into eastern Europe has made international banks vulnerable too.
Here was analyst Zsolt Darvas’s prescription for the summit: “What would be especially important is to encourage banks, western European banks, not to withdraw capital from these countries, because if they withdraw capital, the economic crisis will be much deeper in these countries.”
In spite of development leaps in countries such as Latvia and Lithuania, unemployment rates there are now among the EU’s highest. The World Bank has warned it would be a “human tragedy” to let the crisis re-divide Europe, united after the 1989 fall of the Berlin Wall.