Friday March 20, 01:02 PM
EU leaders boost support for eastern Europe
By Leigh Thomas
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BRUSSELS (AFP) - EU leaders agreed on Friday to double emergency loans to eastern European countries to 50 billion euros, in a show of support for a region hit particularly hard by the worst recession since World War II.
Diplomats said that the leaders had reached the agreement on the second day of a two-day summit in Brussels, aimed at forming a common position on tackling the economic and financial crisis.
"I expect the European Union to say to all its partners, whether in eastern or southeastern Europe ... that they can rely on the European Union," said Austrian Chancellor Werner Faymann.
The leaders were also considering the possibility of contributing 75 billion dollars to the International Monetary Fund's capacity to lend to troubled countries, according to officials.
The European Commission proposed to the leaders to double a credit line for struggling non-eurozone members to 50 billion euros, after the 27-nation bloc already doubled it to 25 billion euros in December.
European Commission chief Jose Manuel Barroso said Thursday that an agreement would "give a signal of great support".
The existing 25-billion-euro credit line is getting rapidly depleted after Hungary and Latvia drew nearly 10 billion euros from it and others starting with Romania likely to follow soon.
At the start of the month, EU leaders ruled out a regional bailout plan for eastern Europe, opting instead to extend help to countries on a case-by-case basis as trouble emerges.
Export-dependent eastern Europe has been hit particularly hard by the crisis due to the region's reliance on the capital of increasingly risk-averse foreign investors capital to finance their economies.
Europe also wants to double the resources of the IMF to 500 billion dollars while Washington has suggested lifting its lending capacity threefold to 750 billion dollars.
A official said after the first day of the summit that leaders were "close to an agreement" on contributing 75 billion dollars to an increase in the IMF's resources.
Czech Finance Minister Miroslav Kalousek, whose country holds the EU's presidency, declined to confirm the amount, but said: "We have some concrete ideas but it would seem appropriate though to talk first to our partners in Asia or the US."
During the first day of the summit, the leaders rebuffed mounting calls for a big new injection of taxpayer money into their ailing economies, tentatively agreeing only to a limited hike in energy investments.
With an estimated 4.5 million European jobs under threat this year, public anger that more is not being done to revive the economy is beginning to bubble over with over a million French workers taking to the streets on Thursday.
Washington has also pressed its European allies in the run-up to the Group of 20 major economies meeting in London next month to play a bigger role in reviving global demand by doing more to prop up their own faltering economies.
"We all agree that we are going to be prudent in our fiscal stimulus, while awaiting the results of the first package of stimulus measures," Czech Prime Minister Mirek Topolanek said after chairing a first day of talks.
Even though they ruled out ambitious new economic recovery plans, the leaders reached an agreement in principle for a package of investments in energy and Internet infrastructure projects worth up to five billion euros.
European nations have been wrangling for months over what projects should benefit from the funds, which are the main EU-financed component of the bloc's 400 billion euro economic recovery plan.
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