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Europe

EU Papers Over Cracks Amid Fears of Economic Iron Curtain

Judging from the comments by EU leaders after less than four hours of talks in Brussels Sunday, it would appear that all is well within the 27-member bloc. But beneath the surface, serious cracks remain.

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Don't worry, be happy: The EU has everything under control -- or so it says

A huge map of Europe, sliced in half by the Communist-era Iron Curtain, looms over the entrance of the building in Brussels where European Union leaders regularly meet.

Twenty years after the collapse of the Berlin Wall lifted millions of Europeans out of economic misery, the main task of Sunday's emergency summit was to prevent the creation of a new financial barrier dividing the continent's East and West.

All the comments after the summit were of constructive debate and a passion for unity. The message was clear: the EU is still a union; its greatest achievement, the single market, remains a bastion against protectionism; and alleged divisions along geographical fault lines are just media hype.

"In the media it looked as if we had very different views, but in the discussions we very much agreed," said Czech Prime Minister Mirek Topolanek, who chaired the talks as the current EU president.

In a two-and-half-page joint statement, leaders "agreed that Europe can only face this challenge and overcome the current crisis by continuing to act together in a coordinated manner."

They also reached an initial agreement on the disposal of toxic assets and "expressed confidence in the medium and long term outlook of all EU economies", despite what many describe as the world's worst economic downturn since World War II.

Strain evident behind the platitudes

Hungary's PM Gyurcsany, left, with Czech PM Topolanek

Hungary's PM Gyurcsany, left, with Czech PM Topolanek

Look beyond the platitudes, however, and it is clear that deep divisions remain. The EU may not be about to break up, but even Topolanek could do little to disguise the fact that it is under severe strain.

"It was very necessary to have this discussion, so as to ensure we are all on the same wavelength and show that we all respect the rules," Topolanek said when asked why he had convened the meeting.

But as Piotr Kaczynksi, an analyst at the Centre for European Policy Studies (CEPS) told the DPA press agency ahead of the talks: "Confirmation of the unity of the single market should never be necessary."

The specter of a new Iron Curtain was raised at the start of the talks by Hungary's Premier Ferenc Gyurcsany.

"In the beginning of the 1990s, we reunified Europe. Now the challenge is to reunify Europe financially: we should not allow a new Iron Curtain to be set up and divide Europe „said Gyurcsany, whose cash-strapped country has required an international bail-out.

In their joint statement, leaders agreed to allay such concerns by acknowledging "clear differences between the member states in central and eastern Europe", rather than along an East-West divide.

While Poland and Slovakia are in sound financial shape, expecting modest economic growth this year, Hungary and Latvia have already been forced to look for rescue from international institutions.

Leaders reject talk of divisions

Prime Minister of Britain Gordon Brown, German Chancellor Angela Merkel, President of France Nicolas Sarkozy, and Prime Minister of Italy Silvio Berlusconi

The EU's heavy hitters rejected talk of a split in the bloc

Sunday's summit was called by the Czech presidency in a bid to shore up unity in the midst of a damaging row over protectionism and fears that it may risk breaking into splinter groups.

Topolanek later insisted that the "idea of divisions between new and old member states, North against South or East against West" had been "clearly rejected" by heads of state and government.

But while the leaders avoided a public fight on Sunday, they did little to dispel the fears which their previous actions had raised.

French President Nicolas Sarkozy, who earlier outraged colleagues by calling for special treatment for French carmakers, set up a future row by demanding that the bloc bring in similar measures on a Europe-wide scale.

Attempts to soothe the feelings of a clutch of member states outraged by their exclusion from an elite group of EU countries preparing a summit of the Group of 20 (G20) leading economies in London failed when Finnish Premier Matti Vanhanen vowed to push for an explanation among EU foreign ministers.

And Hungarian calls for the creation of a 190-billion-euro ($240-billion) crisis fund for the whole region were dismissed by the EU's richest nation, with German Chancellor Angela Merkel saying: "The situation is very different. We cannot compare Slovakia or Slovenia with Hungary."

As Philip White, senior research fellow at the London-based Centre for European Reform put it: "Leaders are acutely aware of the parlous economic background, so they will bend over backwards to come out with soothing statements.

"The real problem is that a lot of leaders will be unable to live up to their rhetorical commitments," White predicted.

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