EU finance ministers have warned against protectionist tendencies in a meeting in Brussels as tensions mount following French President Nicolas Sarkozy's pledge to give the country's struggling carmakers eight billion euros in state loans.
AFP - EU finance ministers met in Brussels Tuesday, amid a simmering row between France and other member states over protectionism, to try to find a joint way forward to tackle the economic crisis.
The EU presidency thinks that "the biggest risk at the moment is the risk of protectionism," Czech Finance Minister Miroslav Kalousek told journalists as he arrived to chair the meeting in Brussels.
A crisis summit at the end of the month has been called to address the danger of protectionism, added Kalousek, whose country holds the EU's rotating presidency.
The finance ministers meeting "is about the risk (of) seeing the coordination breaking down. We need to strengthen coordination ahead of the European summit," said Swedish minister Anders Borg.
His British counterpart Alistair Darling defended national governments protecting national assets. But he said it should be done in a coordinated manner to avoid the spectre of protectionism, which he said prolonged the economic woes of the 1930s.
"What we want to do is to ensure that countries take whatever action is right for them together," he told reporters.
"The effect of doing that will have a far greater effect than if we just do these things on our own," he added.
"But it is critically important, whether it's vis-a-vis America or Europe, that if there is any suggestion that you are going to allow protectionism you should stamp on it as firmly as possible."
Announcing the extraordinary EU summit Monday, Czech Prime Minister Mirek Topolanek said the leaders would "examine steps taken up to now within the recovery plan and the efficiency of these steps."
He said he would fix the exact date of the summit after talks with European Commission chief Jose Manuel Barroso on Wednesday, but indicated that it would be before the end of February.
While seeking harmony and cooperation in the face of the biggest economic crisis to face the European Union, the Czechs have themselves clashed with France in a high-profile protectionism row.
French President Nicolas Sarkozy on Monday announced state loans of almost eight billion euros (10.4 billion dollars) for French carmakers, in exchange for pledges to keep jobs and assembly lines in France.
Last week, Sarkozy said car markers receiving state aid should keep production at home and even think about bringing foreign plants in the EU back to France.
His comments drew a sharp response from Topolanek, whose country is home to a number of foreign-owned car plants, including one from France's PSA Citroen Peugeot.
Sweden's Borg, who said his country's auto industry remained "strong" also said that the sector's problems must be dealt with "in a fair way that is also strengthening the competition."
Slovakia went further, threatening to send French gas company GDF Suez "home" if Paris went ahead with its protectionist statements amid the economic downturn.
Another of the key issues being discussed by the EU finance ministers was banks' "toxic assets" and how to deal with them.
"The option of a split between a good and a bad bank is open," said Darling, referring to the practice of hiving off bad assets into a separate entity in order for banks to regain the confidence of lenders and investors.
Britain has also introduced a system of government guarantees for the so-called "toxic assets".
"I think most countries will want to keep all their options open," he added.
On Monday, Eurogroup chairman and Luxembourg Premier Jean-Claude Juncker said the toxic issue must be dealt with in a coordinated fashion, while admitting that several methods could be used depending on national situations.
EU Economic and Monetary Policy Affairs Commissioner Joaquin Almunia, speaking with Juncker, agreed that there was no one-size-fits-all solution.
Last December, EU leaders approved a 200 billion euro stimulus package for Europe, though the measures were presented as a tool-box from which each nation could adopt the measures it saw fit.
Date created : 2009-02-10