The Czech EU presidency accused an inner circle of eurozone countries on Tuesday of breaking bloc rules to shield their economies from recession as the group struggles for a common line on tackling the crisis. The comments by Czech Prime Minister Mirek Topolanek came despite an outline agreement by EU finance ministers in Brussels on how to treat huge amounts of suspect debt that is choking off the supply of credit from banks into the economy.
But underlining the struggle facing the 27-nation bloc in agreeing its response to the worst double-whammy of economic and financial crisis in its 50-year history, splits emerged on public deficits and the use of EU funds for stimulus efforts.
"The response of the euro zone countries to the financial and economic crisis deformed the joint project of the euro more than any other imaginable event," Topolanek said in an online chat on the Czech EU presidency's Web site. The Czech Republic is not among the 16 nations authorised to use the euro common currency.
Topolanek accused French President Nicolas Sarkozy on Monday of risking a spiral of protectionist actions around the region after he unveiled 6 billion euros ($7.8 billion) of aid to the French car sector. The European Commission said on Tuesday the state rescue plan could prompt legal concerns and it had asked the French government to clarify details.
Separately, Slovakia - where many of Europe's cars are made - said it would appeal to the Commission and other EU bodies if French state loans to car giants PSA Peugeot-Citroen and Renault proved protectionist, while a senior German source said Berlin was concerned about a possible distortion of competition law. "Today the Commission has written to the French authorities to ask for clarification of the plan," a spokesman for the European Union's executive arm told a regular briefing.
The EU is in a race to present a single, coherent line on tackling the crisis before a G20 summit in April. The Czech presidency announced on Monday plans for a special EU summit later this month to co-ordinate different national approaches. The EU ministers agreed on the need for a co-ordinated approach in treating toxic debt assets to ensure a level playing field and to avoid distortions among banks, but did not reach a final deal on issues such as how they should be valued.
"Regardless of whatever mechanism is used, we need common guidance on how to value assets and clear guidance on what assets are eligible for such schemes," EU Monetary Affairs Commissioner Joaquin Almunia said, adding that the Commission would present proposals in a couple of weeks. Britain's Alastair Darling, whose country is looking to deal with toxic assets through a series of insurance mechanisms, said there needed to be leeway for national approaches.
"It is important that we keep all our options open: I have made clear that the option of a split between a good and bad bank is open," he said. A "bad bank" would be used to park all the questionable assets. Divergences also emerged on a European Commission plan to fund energy links and broadband Internet infrastructure with 5 billion euros ($6.5 billion) of unused EU funds.