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by Fran on Sun Mar 1st, 2009 at 01:48:20 PM EST
Unity at Stake as EU Summit Begins Under Protectionism Cloud | Europe | Deutsche Welle | 28.02.2009
EU leaders gathered in Brussels on Sunday for a summit designed to shore up the bloc's beleaguered unity in the midst of a damaging row over protectionism and fears that the EU may risk breaking into splinter groups. 

"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-neighbor policy is unacceptable," Czech Prime Minister Mirek Topolanek, who is to chair the meeting as current holder of the EU's rotating presidency, said on the eve of the summit.

 

The informal meeting of the leaders of the EU's 27 member states is officially set to discuss the bloc's response to the deepening economic crisis. It is the fourth full summit to focus on that subject since October.

 

But the summit's preparations were marred by a bitter row between the Czech Republic and France -- the previous holder of the presidency -- after French President Nicolas Sarkozy criticized French car makers who had shifted production to central Europe and said French auto companies should give priority to French workers.

by Fran on Sun Mar 1st, 2009 at 01:50:08 PM EST
[ Parent ]
criticized French car makers who had shifted production to central Europe and said French auto companies should give priority to French workers

Which part of "capital flight is not free trade" do these people fail to understand?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Mar 1st, 2009 at 01:53:53 PM EST
[ Parent ]
"Which part of "capital flight is not free trade" do these people fail to understand?"

Perhaps the part about "community" and "comparative advantage?" Or perhaps the goal to keep the central Europeans in their place...

by asdf on Sun Mar 1st, 2009 at 02:06:13 PM EST
[ Parent ]
You can legitimately argue that there is a case for moving manufacturing to Central and Eastern Europe (although there is also a lot of regulatory arbitrage flying the flag of convenience about it). But to conflate it with free trade is not kosher. Capital moving across borders has nothing to do with comparative advantage, which is a model for static capital and labour and mobile goods.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Mar 1st, 2009 at 02:24:32 PM EST
[ Parent ]
Regardless of the terminology, it is obviously a case of job protection at the expense of eastern Europe.
by asdf on Sun Mar 1st, 2009 at 02:59:39 PM EST
[ Parent ]
Yes and no. A lot of what goes on here is simply union busting and abusing the gross inadequacies of environmental regulations in many Eastern countries.

If - say - Poland is actually more efficient at making widgits than France, then by all means, locate widgit production in Poland. But if Poland (as is often the case) just has worse unionisation levels and shitty environmental regulations, it's a matter of squeezing wages1 and externalising environmental despoilation. In other words, partly an issue of distribution between labour and capital, and partly an issue of the Polish government deciding to spend its environmental capital to subsidise industries.

Now, you can argue that Poland should be allowed to subsidise its industry - and I am receptive to that argument. You can even argue that Western Europe should pay for those subsidies, in whole or part. I would be receptive to that argument too, although I might want to attach some political strings, such as full cooperation with an EU investigation into the whole sordid torture flights affair.

But first, I think that subsidy-by-environmental-despoilation is a rather undesirable kind of subsidy. And second, there is no way that such subsidies are part of a "free trade" agenda - in fact, they are quite the opposite: Distortion of "free trade" for political reasons. And they need to be given credit for that.

- Jake

1) Just to be clear here: When I speak of squeezing wages, I speak of squeezing wages relative to productivity. I don't argue that Polish wages should match Danish wages if Polish workers are only half as productive - that would be unreasonable and asking the Poles to price themselves out of their jobs. On the other hand, if Polish workers are half as productive as Danish workers they should not be paid only a quarter as much - that would be wage dumping, and clearly unacceptable behaviour.

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Mar 1st, 2009 at 03:26:50 PM EST
[ Parent ]
And why would job protection be a bad thing?

We can end job protection when we have also have equivalent social investment protection.

Moving 'jobs' around like pawns for the sake of rentier expediency is hardly a cause for celebration and enthusiasm.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Mar 1st, 2009 at 06:22:35 PM EST
[ Parent ]
Eastern European Nations Fear Rift With Richer Neighbors | Europe | Deutsche Welle | 01.03.2009
EU leaders tried to overcome their differences on how to address the ongoing economic crisis, but protectionism fears and unheeded calls for aid from smaller members raised fears of a "new iron curtain" in Europe.  

Heads of state and government met in Brussels on Sunday, March 1, in an effort to agree on a common European response to the continuing global financial crisis that has pushed the EU into a deep recession.

 

The EU leaders are ready to commit to putting their single market at the heart of their recovery plans and emphasize that EU efforts to promote open markets are reflected elsewhere, according to a draft summit statement.

 

The draft being discussed by EU leaders stressed that the bloc's single market is "the engine for recovery to support growth and jobs."

by Fran on Sun Mar 1st, 2009 at 01:50:36 PM EST
[ Parent ]
Economic 'Iron Curtain' threatens to divide Europe - Telegraph
The European Union has been warned not to let a new economic "Iron Curtain" divide the continent during the global downturn.

Hungary urged the 27 EU leaders meeting at an emergency summit in Brussels not to let the bloc's weakest members go under in the crisis.

Ferenc Gyurcsany, Hungary's prime minister, said the credit crunch was hitting poorer, eastern member states the hardest. The Hungarian leader called for a special EU fund of up to €190 billion (£168 billion) to help restore trust and solvency in eastern EU members' financial markets.

"We should not allow that a new Iron Curtain should be set up and divide Europe," said Mr Gyurcsany. "In the beginning of the nineties we reunified Europe, now the challenge is whether we will be able to reunify Europe financially."

by Fran on Sun Mar 1st, 2009 at 01:53:10 PM EST
[ Parent ]
That "Iron Curtain" discourse is unseemly and unhelpful  - especially as (as I flag below) the Central Europeans vigorously disagree between themselves on the help they want to see. But it's music to Anglo ears: The selfish Germans are re-imposing communism on the countries we saved from the evil Soviets! (in other words: Europe. Is Doomed. Again)

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Mar 1st, 2009 at 03:01:18 PM EST
[ Parent ]
The extent to which Central European countries economically ignore each other feels remarkable. On the other hand, this is a normal circumstance between any neighboring poor or developing countries in the globalized free market - chance for big profits appear to lie only in exchange with the most successful corporate giants. This mirrors the capitalist competition "imperative" - regular folks are compelled to believe in a "jungle" competition for better jobs, education, cars, housing... while the elites enjoy a much more relaxed competition with plenty of exchange in financial, legal, entertainment services or knowledge. Eventually, a horde of wannabees (people or countries) end-up sucking a few corporate-multinational paps, while watching each other with stressed suspicion and basically not thinking of any endeavor together at all. That's probably the crucial difference between haves and have-nots in this world.

I wonder whether some kind of regional protectionism would help Eastern Europe, or would it be feasible at all. Competing separately for help from the West may only make the things worse for the Eastern European country, as each of them would have diminishing bargaining powers and increasing debt burden. A kind of regional self-sufficiency might be a solution in a prolonged global recession. Whether regionally or globally, the world has to learn to live without the globalization expansion eventually, right? How much would the West approve an Eastern European drive to solve basic functionality problems with less long-range trade? Would the East-European agree that following best daily opportunities of the global market is an impoverishing trap for cattle-not-Jupiter players? Do they remember something good of Comecon?

by das monde on Mon Mar 2nd, 2009 at 05:23:47 AM EST
[ Parent ]
they would help out their old eastern European vassals.  Think what that would do.  No need to have totalitarian regimes and militaries controlling those folks against western Europe when they look to you as their economic savior.  Wonder how the rest of Europe would respond to Russian overtures.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Sun Mar 1st, 2009 at 06:19:19 PM EST
[ Parent ]
Mr. David Gordon, a former Bush official and decided neo-con bloviated at length on this subject at Sen. Kerry's Foreign Policy Implications of the Global Economic Crisis hearing last Wednesday. (Video no longer available.)  He was most concerned about Belarus and Ukraine being bereft of western capital and being offered aid by Russia.  Seemed as though his biggest worry was that Russia might aid them, stricken as Russia is with its own problems.  

Gordon feared that aid to these former republics would be the first step towards a reconstituted "greater Russia," but was not really clear. Gordon, as the servant of oligarchs, seems to identify with the remaining oligarchs in Russia and fear that their financial over-extensions will be exploited by Putin to increase the power of the state.  Overall, Gordon's inability to articulate any interest in this area other than that of his perception of US interests was truly amazing.  How dare they have any interests other than those of the USA?!

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Mar 1st, 2009 at 08:16:13 PM EST
[ Parent ]
And might I add, Holy Crap, I knew what I was talking about for a change (in the area of politics).  Amazing.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Mar 2nd, 2009 at 05:59:00 AM EST
[ Parent ]
France 24 | Europeans plot anti-crisis strategy at Brussels meeting | France 24
EU leaders hold a special summit on Sunday aimed at finding unity in the face of the financial crisis. It comes after a meeting of the nine Eastern European members, worried about a lack of support from their Western partners.

- EU leaders struggled on Sunday to overcome divisions over the increasingly dire economic crisis as protectionism fears and appeals of help from poorer members prompted a warning of a "new iron curtain" in Europe.
   
Heads of state and government were holding an emergency summit in Brussels to thrash out a united front in the face of the crisis after wrangling for weeks over what to do as Europe slips ever deeper into recession.
   
With eastern European countries particularly hard hit by the crisis, Hungarian Prime Minister Ferenc Gyurcsany called for a new show of solidarity, recommending an international support fund for the region.
   
"We should not allow a new iron curtain to be set up and divide Europe in two parts," he warned, proposing a fund worth up to 190 billion euros (240 billion dollars).
   
That was far more that the 24.5 billion euros in aid that international institutions agreed on Friday to make available to eastern European countries to help them cope with the crisis.

by Fran on Sun Mar 1st, 2009 at 01:51:30 PM EST
[ Parent ]
New EU Members Should be Treated Equally, Says Polish Minister | Europe | Deutsche Welle | 01.03.2009
European Union veterans should treat newly-entered members from Central and Eastern Europe as equals, and give them the same chance to join the euro as old members, Poland's minister for Europe said on Sunday. 

"Nobody should preach to us now what kind of stability rules need to be kept (to join the euro), because some of the economies in the region are much more stable, and certainly the public finances are much more healthy than in many of the euro zone countries," Mikolaj Dowgielewicz told the DPA press agency.

And the EU's largest newcomer is less than happy with the fact that international talks on the financial crisis led by the Group of 20 (G20) leading economies have no representation from Central and Eastern Europe.

"None of those people around the table are actually from a country that is in the catching-up period in the EU, you have lots of old member states: there is certainly an issue here," Dowgielewicz said.

by Fran on Sun Mar 1st, 2009 at 01:52:06 PM EST
[ Parent ]
Gordon Brown insists the European Union is united in response to global economic crisis - Telegraph
Gordon Brown has insisted the European Union is united in its response to the global economic crisis after joining fellow leaders for an emergency summit in Brussels.

Amid reports of a split between the major economies and members states from central and Eastern Europe, the Prime Minister said: "People neither want protectionism nor do they want to be in a situation where we don't take the interest rate and the fiscal action that is necessary.

"I found complete support for the measures that I am talking about that are central to the success of the G20 [summit in London next month]."

Speaking after the talks, Mr Brown said: "Today was the start of a European consensus on all these major issues that are facing the world community: yes to better regulation; yes to action on the shadow banking system and hedge funds; no to protectionism; yes to fiscal and monetary stimulus; no to maintaining the old status quo on the role of our financial institutions."

He said he would take a "clear message" to Barack Obama from all EU leaders when he travels to Washington on Monday.

by Fran on Sun Mar 1st, 2009 at 01:52:48 PM EST
[ Parent ]
BBC NEWS | Europe | EU holding economic crisis summit

EU leaders have begun an emergency summit in Brussels aimed at preventing the economic crisis from opening up a new east-west rift.

The summit was called after French President Nicolas Sarkozy promised to bail out France's car industry if it pledged to keep jobs in France.

The French move raised fears that national protectionism could scupper hopes of recovery within the EU.

Leaders of badly-hit East European nations met prior to the summit.

Hungary's Prime Minister Ferenc Gyurcsany warned: "We should not allow that a new Iron Curtain should be set up and divide Europe."

His Polish counterpart Donald Tusk said "protectionism and egoism" must be avoided.

by Fran on Sun Mar 1st, 2009 at 01:55:57 PM EST
[ Parent ]
Donald Tusk said "protectionism and egoism" must be avoided.
Does he think he can keep Sarko from attending?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Mar 1st, 2009 at 08:19:01 PM EST
[ Parent ]
Germany rejects calls for Eastern Europe bailout - International Herald Tribune

BRUSSELS:

Germany on Sunday rejected appeals for a single multibillion-euro bailout of Eastern Europe, even after Hungry begged European Union leaders not to let a new "Iron Curtain" divide the Continent into rich and poor.

The swift, strong comments by Chancellor Angela Merkel of Germany dampened hopes that leaders at the EU summit meeting Sunday could forge a unified stance to tackle the worsening economic crisis.

As Europe's largest economy, Germany has been under increasing pressure to take the lead in rescuing eastern EU members, but Merkel insisted that a one-size-fits-all bailout was unwise.

"Saying that the situation is the same for all Central and Eastern European states, I don't see that," said Merkel, adding "you cannot compare" the dire situation in Hungary with that of other countries.

by Fran on Sun Mar 1st, 2009 at 01:57:28 PM EST
[ Parent ]
The FT puts the same misleading headlines over facts that do not warrant it:


EU rejects eastern Europe rescue plan

European Union governments vowed on Sunday to conquer the financial crisis and recession gripping their economies by extending help to beleaguered eastern European states on a country-by-country basis and respecting the rules of the single European market.

(...)

The summit was called to reaffirm core EU principles, such as avoidance of protectionism and solidarity among richer and less well-off member-states, in the face of a crisis that is putting the bloc's unity under severe pressure.

While recognising the need to stop financial contagion spreading from east to west, the leaders rejected an appeal from Hungary for a €180bn aid programme to recapitalise the banking systems of central and eastern Europe and reschedule foreign currency debt.

"More, of course, will be done, but on a case by case basis, not on a category basis. In the new member-states there are different situations," José Manuel Barroso, European Commission president, told reporters after the summit.

The Hungarian proposal ran into objections not just from Germany, the largest contributor to the EU budget, and other rich western European states, but from former communist countries such as the Czech Republic and Poland.

They contended that, in contrast to Hungary, which received an emergency $25bn aid package last year from the International Monetary Fund, the World Bank and the EU, their economies were fundamentally sound and did not need emergency help.

"When it comes to any specific plans for eastern Europe, we don't need those plans," said Mikolaj Dowgielewicz, Poland's EU affairs minister.

Summit participants pointed out that the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank had already announced a €24.5bn financial aid package last week for both EU and non-EU countries in eastern Europe.

"We help countries in need and we will do so further, particularly through international institutions," Angela Merkel, Germany's chancellor, told reporters.

(...)

Mr Barroso said the EU leaders had agreed that western European banks should help their eastern European subsidiaries by not starving them of a share in the multi-billion euro rescue funds that governments have given to the parent banks.

(...)

There was a misperception that the EU had done too little for the 10 former countries that joined the bloc between 2004 and 2007, Mr Barroso said. The EU had increased its balance of payments assistance fund to €25bn and had already drawn on it to help Hungary and Latvia, and still had €15.4bn left, he said.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Mar 1st, 2009 at 02:58:41 PM EST
[ Parent ]
Agence France Presse does the same thing...

EU rejects eastern Europe bailout, protectionism

EU leaders ruled out on Sunday a regional bailout plan for eastern Europe despite a Hungarian warning of a "new iron curtain" while rejecting protectionism as a response to the economic crisis.

The European leaders promised to extend a helping hand to any EU country needing help but stopped short, at an emergency summit in Brussels, of agreeing on a region-wide package to help eastern Europe cope with the turmoil.

"I think that it was perfectly clear that the European Union isn't going to leave anybody in the lurch," Czech Prime Minister Mirek Topolanek told journalists after chairing the summit as holder of the bloc's presidency.

All I see is a lot of statements trying to score particular political points, no analysis and no action.


Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Carrie (migeru at eurotrib dot com) on Sun Mar 1st, 2009 at 03:15:41 PM EST
[ Parent ]

EU to give east case-by-case help

European Union governments vowed on Sunday to conquer the financial crisis and recession gripping their economies by extending help to beleaguered eastern European states on a country-by-country basis and respecting the rules of the single European market.

I think it's the same link.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Mar 1st, 2009 at 03:26:29 PM EST
[ Parent ]
And again: EU summit pledges aid for eastern states

Still the same link, and mostly the same article. Boy is the interpretation flying around...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Mar 1st, 2009 at 04:51:39 PM EST
[ Parent ]
kindly collated by Reuters

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Mar 1st, 2009 at 03:27:53 PM EST
[ Parent ]

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