Governments must not head down the path of protectionism as they battle the deepening global economic crisis, European Commission President Jose Manuel Barroso said on Monday. "As businesses fail and job losses mount, the siren voices of economic nationalism are making themselves heard again, as if we have learned nothing from the 1930s," Barroso said in the Czech Republic, which is currently at the helm of the 27-nation European Union.
"But there is one small problem for those hoping economic nationalism will protect them. It will not," he said. "The single market, on the other hand, with its free movement of goods, capital, services and people, has delivered plenty of growth and jobs. A strong single market is the way out of the crisis," he added. Barroso was speaking at a conference taking stock of the five years since the EU's largest-ever expansion - 10 countries, most of them ex-communist states like the Czech Republic, joined in 2004.
Barroso did not spotlight any individual governments over their alleged protectionism. Many of the EU's ex-communist newcomers are increasingly concerned about the spectre of protectionism looming over Europe, especially after France made aid to its car sector conditional on companies not moving production to the region.
Although the European Commission, which is the bloc's executive body, deemed the French auto package on Saturday to be free of protectionism, fears lingered that as the crisis worsens governments will resort to bailing out their industries at the expense of other countries. "If we are to continue to realise the full potential of the European Union during these difficult times, it's very important that we reap the benefits of an enlarged Europe," Barroso said.
"Our achievements together are increasingly coming under attack," he warned. Czech Prime Minister Mirek Topolanek also sounded the alarm. "Protectionism is always harmful, and in the case of the EU it is illogical," he told the conference. "We must learn a lesson from the crisis, and say no to isolation, no to protectionism, and yes to co-operation and integration," he said. "The single market represents the most powerful weapon against the crisis... We're in the same boat and, I hope, all hands are on the same deck," he added. The ex-communist countries economies are highly dependent on a steady stream of credit from Western sources that has all but dried up.
Many are particularly worried because the crisis has brought long-robust economic expansion to a halt, raising the spectre of social unrest. The EU's hardest-hit member state, Latvia, which was rocked by riots in January, has plunged from double-digit growth and is facing a 12-percent contraction this year.
But the regional picture is diverse: Poland, for example, is still expecting growth of around 2.0 percent this year. Meeting in Brussels for a emergency summit on Sunday, EU leaders promised to extend a helping hand to any EU country needing help but stopped short of agreeing on a region-wide bailout to help the ex-communist bloc cope with the turmoil.
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