Britannia Radio

This division is not likely to be healed easily and certainly not
without vast expenditure of non-existent funds.

It shows up how casual and careless the EU has been in its reckless
push to the east.
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EU OBSERVER 26.2.08
Financial crisis threatens east-west divide in EU
PHILIPPA RUNNER

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.

"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."