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01.03.2009 International

EU holding economic crisis summit


European Union leaders are preparing for an emergency summit in Brussels seeking to bridge differences on how to deal with the global economic crisis.

The summit was called after French President Nicolas Sarkozy promised to bail out France's car industry if it did not shift jobs out of France.

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

Leaders of badly-hit European nations will also meet prior to the summit.

Many of the newer EU members of Central and Eastern Europe have seen their financial institutions and economies battered by the developing recession.

The heads of nine of those nations - among them Hungary and Latvia, both facing serious liquidity problems - will gather before the full summit begins.

They are then expected to highlight their concerns about protectionism and call for more help from richer EU nations, reports the BBC's Oana Lungescu, in Brussels.

However, officials have played down chances of EU leaders taking any decision on Hungary's call for a 180bn-euro (£160bn) aid package for Central and Eastern Europe.

'New dividing lines'
The summit, called by the Czech Prime Minister Mirek Topolanek, whose country holds the rotating EU presidency, is being held just a week after the same EU leaders met to discuss reforming the region's financial system.

Ahead of the latest meeting, France's President Sarkozy denied accusations of protectionism levied at his three billion euro bail-out plan, which aims to keep French carmakers manufacturing in France.

However, he said that if the US defended its own industries, perhaps Europe should do the same.

The French move has been criticised by the Central Europeans, who argue that the French bail-out plan should not be implemented at their expense.

"We do not want any new dividing lines. We do not want a Europe divided along a North-South or an East-West line," Mr Topolanek said ahead of Sunday's summit.

"Efforts and measures to fight the economic crisis within the EU must respect the principle of solidarity, but they also require that all players show responsibility," Mr Topolanek said.

European Commission President Jose Manuel Barroso also warned that state aid to bail out ailing sectors should not be used to reverse the EU's progress towards competitive cross-border markets.

"The EU needs open world markets now more than ever if part of our recovery is to be export-led," he said.

However, no new decisions are expected in Brussels on Sunday, as EU leaders will be meeting again later this month for a scheduled summit, our correspondent says.

That summit is part of the build-up to a G20 meeting of world leaders which UK Prime Minister Gordon Brown will host in London on 2 April.

In a letter to the EU leaders meeting in Brussels, Mr Brown echoed the call to work together: "We face the threat of a retreat into protectionism," he said.

Mr Brown, who travels to Washington this week, where he will become the first European leader to meet US President Barack Obama, said the upcoming G20 talks represented an opportunity to agree "a new deal".

"Only by working together will we deliver the EU and international recovery we need."