Britannia Radio

The EU 6 were a reasonably coherent bloc  - the original core 
states.  The addition of the next 9 was still viable though sources 
of conflict were there.  The headlong rush to the present 27 was 
bound to be unworkable as soon as real tensions or a crisis 
appeared.  Here it is!

Much of what is reported here is more expressions of panic than 
coherent policy.  There is no easy way through it - in fact total 
collapse seems the most likely outcome.

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THE TIMES 2.3.09
New 'Iron Curtain' will split EU's rich and poor

David Charter in Brussels

Eastern European countries gave an apocalyptic warning yesterday of 
hordes of unemployed workers heading west as a new Iron Curtain 
divides rich from poor inside Europe.

Twenty years after the fall of the Berlin Wall, Western leaders were 
told yesterday that five million jobs could be lost in the "new" 
European Union countries of the East unless radical action were taken 
to bail them out.

The spectacular collapse of some of the post-communist tiger 
economies led to demands at an EU summit in Brussels for a rescue 
fund of ?190 billion (£170 billion) to stop social collapse in the 
Eastern nations spilling over into the rest of Europe.

The plea, led by Hungary, was rejected in a bad-tempered meeting of 
the 27 European leaders, dominated by fears that Western EU countries 
would rather prop up their own large industries and jobs at the 
expense of the East.

Instead Gordon Brown renewed his call for a huge injection of funds 
into the International Monetary Fund, which has already doled out 
large sums to Hungary and Latvia and is soon to receive a begging 
letter from Romania.

The Prime Minister refused, however, to say where the fresh money for 
the IMF would come from. As he prepared to fly off for talks with 
President Obama today, Mr Brown left behind an EU increasingly split 
between its old and new economies and lacking the unity that he hoped 
to present in Washington and at the G20 summit in London next month.

Ferenc Gyurcsany, the Hungarian leader, openly raised the spectre of 
collapse in Eastern Europe and the creation of a new Iron Curtain.
"Central Europe's refinancing needs in 2009 could total ?300 billion, 
30 per cent of the region's GDP," he said in a paper calling for a 
fund of ?160 billion to ?190 billion to be set up by the richer EU 
members.

"A significant crisis in Eastern Europe would trigger political 
tensions and immigration pressures. With a Central and Eastern 
European population of 350 million, of which 100 million are in the 
EU, a 10 per cent increase in unemployment would lead to at least 
five million unemployed people within the EU."
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TELEGRAPH     2.3.09
New 'Iron Curtain' threatens to split Europe over economic crisis
Europe is in danger of being split by a new 'Iron Curtain' as the 
deepening economic crisis separates east from west, the EU has been 
told.

By Bruno Waterfield in Brussels

Hungary warned the growing split threatened to provoke outbreaks of 
social unrest and a flood of unemployed immigrants travelling to 
Western Europe in search of jobs.

Ferenc Gyurcsany, the Hungarian prime minister, called for a £169 
billion bail-out of Eastern Europe to prevent a major crisis that 
would reverberate across the continent.

He spoke as nine Central and Eastern European countries - Poland, 
Hungary, the Czech Republic, Slovakia, Latvia, Lithuania, Estonia, 
Bulgaria and Romania - held an unprecedented breakaway summit before 
the meeting of all 27 EU member states in Brussels.

He said: "We should not allow a new iron curtain to be set up and 
divide Europe in two parts. This is the biggest challenge for Europe 
in 20 years. At the beginning of the 90s we reunified Europe. Now it 
is another challenge - whether we can unify Europe in terms of 
financing and its economy."

In a six-page letter to European leaders meeting for a crisis summit 
lunch, Mr Gyurcsany made dire predictions about the consequences of 
letting Eastern Europe, the EU's poorest countries, bear the brunt of 
a recession.
He warned that if EU member states in Central and Eastern Europe 
faced a severe downturn, then other European countries would feel the 
knock-on effect of social unrest and an influx of millions of migrants.

"A significant economic crisis in Eastern Europe would trigger 
political tensions and immigration pressures. With a Central and East 
European population of around 350 million of which 100 million are in 
the EU, a 10 per cent increase would lead to at least five million 
additional unemployed within the EU," he wrote.

Mr Gyurcsany went on to forecast "massive contractions in economic 
activity and large-scale defaults" with governments in Eastern Europe 
refusing to pay back up to £89bn of debts owed to Western European 
banks.

"A 10 per cent default rate on the Eastern European external loan 
book would put significant further strain on the solvency of the 
European banking sector, the capital impact would be at least 
EUR100bn," he said.

The summit ended with EU leaders saying they were determined to avoid 
protectionist moves in response to the economic crisis.  [That is so 
much hot air.  Like "sin" - everyone's against "protectionism" in 
other countries -cs]

European Commission president José Manuel Barroso said: "There was 
consensus on the need to avoid any unilateral protectionist measures."
But Angela Merkel, the German chancellor, dismissed the call for an 
Eastern Europe aid fund, saying: "I see a very different situation 
among eastern countries, I do not advise going into the debate with 
massive figures."  [She seems more out of touch with reality each 
time she opens her mouth -cs]

The gathering followed a bitter row over protectionism and Eastern 
European fears that larger Western EU economies, especially France 
and Germany, were engaged in protectionist bailouts of national 
industries.
France and the Czech Republic, representing the West versus East 
split, have been at the centre of a deeply damaging row over economic 
protectionism.

When announcing a £2.7 billion (EUR3bn) aid package to French car 
makers Renault and Peugeot Citroen last month, President Nicolas 
Sarkozy implied that the cash was in exchange for a promise not to 
shut French plants or move to cheaper sites "in the Czech Republic or 
elsewhere".
Mirek Topolanek, the Czech Prime Minister and current holder of the 
EU's rotating presidency, warned against taking "beggar thy 
neighbour" protectionist measures as recession bites.

"This is the greatest crisis in the history of European integration," 
he said. "We do not want any new dividing lines. We do not want a 
Europe divided along a North-South or an East-West line; pursuing a 
beggar-thy-neighbour policy is unacceptable."

In a move to ease the tension, the European Commission declared 
itself satisfied with guarantees from Paris that the French plan to 
bail out its auto sector was not protectionist.  [!!! -cs]

President Sarkozy insisted that accusations of French protectionism 
were "totally nonsensical things that do not reflect reality".

He claimed that the Czechs, and other countries, should be grateful 
for jobs in factories owned by French automobile makers.
"If we don't save the parent company then the subsidiaries will come 
down as well," he said. "You might well be surprised that we did not 
ask these countries whose friends we are, where these plants are in, 
not to help us in bailing out our automotive industry."

The French president insisted that the United States, rather than 
Europe, was the source of protectionist threats.

He said the situation in Europe meant no-one could accuse any country 
of being protectionist when the Americans had put up $30 billion (£21 
billion) to support their automotive industry. "There, there is a 
risk of protectionism," he said.

Donald Tusk, the Polish prime minister, who hosted the meeting, said: 
"All participants agree that in the time of crisis, maintaining 
solidarity in Europe is of paramount importance. We would like Europe 
to do everything to avoid the temptation of protectionism and egoism."
======================
TELEGRAPH 2.3.09
Euro set to fall further on EU split over eastern Europe bail-out
The euro is set to fall further against the dollar as investors 
become increasingly concerned about the unwillingness of European 
Union countries to act together to tackle recession.

By Amy Wilson

The euro dropped 0.5pc to $1.2604 (88.7p) against the dollar on 
Monday morning. European leaders have rejected a proposal by Hungary 
that a £169bn rescue fund be set up to help poorer eastern European 
nations through the economic downturn.

"The EU nations seem to be taking very much a nationalistic approach 
and that's obviously going to be a big negative," said Ian Stannard, 
currency strategist at BNP Paribas in London. "We would certainly be 
looking for the euro to come under further pressure."

The European currency may fall to $1.2330 against the dollar, Mr 
Stannard said.

The pound may also drop further against the dollar as a result of the 
crisis in some eastern European economies, Mr Stannard said, because 
large British and European banks were among the biggest lenders to 
the region during the boom years.

The dollar has enjoyed a strong run in recent months because of a 
flight to safety by investors, and that is likely to continue as 
emerging markets increasingly feel the pain of the global slowdown.

Hungary has warned Europe could be split by a "new iron curtain" if 
the economic crisis is allowed to separate east and west. Prime 
Minister Ferenc Gyurcsany said there could be a flood of immigrants 
into western Europe, social unrest and defaults on loans made by 
western European banks if nothing is done by wealthier EU nations to 
help central and eastern European states.