Article
European solidarity on trial
The EU denied a plea from Hungary for a 240 billion US dollars bailout of struggling Eastern European countries. Eight other EU nations joined that plea including Poland, Slovakia, the Czech Republic, Bulgaria, Romania, Estonia, Latvia and Lithuania. Hungarian Prime Minister Ferenc Gyurcsany warned:“We should not allow a new Iron Curtain to be set up and divide Europe into two parts.”
Q: There are people saying that the recession may cause a new division between Eastern and Western Europe. I want to get your take on that. Do you see a new iron-curtain between Eastern and Western Europe?
K: No. I wouldn’t. The EU is a single market. And the EU is a collective body where we have participation on an equal footing on 27 countries and 27 governments. The new members of the EU are more vulnerable. I mean these are the economies that have been developing in the last 10 15 years much more rapidly, they are closing the gaps with the EU economies. But at the same time, they are still very fragile. The economies of western, the old EU members are hit in another way, for example, the automobile industry and very huge decrease in the economic growth and even impressive percentage of recession. I think everybody among the decision makers in Europe has a very clear idea that the issues have to be tackled together. Any division would not make good, any protectionist measures, not only in the EU, but in the world are not going to make good for finding an outcome of this crisis. What we have to do is to be maximum open and to use all the instruments to stimulate the competitiveness, the innovations in the economy. And I think that the governments in Europe realize that and the principle of solidarity is a very basic principle in the EU.
Q: But the EU has denied a 240 billion US dollar bailout plan for the Eastern European countries and German chancellor Merkel said a one-size-fits-all bailout was unwise. What does that mean? Does Eastern European countries need a sweeping new bailout plan at all?
K: No, that’s absolutely right. I think that these European countries are different. One-size-fits-all is not appropriate mechanism. At the same time, we should have instruments that are available for any member of the EU. This is in the decisions of the European summit. They don’t talk about Eastern Europe, they say we increase; we doubled the ceiling for helping the budgets and the balances of payments for nation states to 50% billion Euro, and anyone could have cost to them. Of course, again, new members are much more likely to ask about that. There’s no division and there shouldn’t be any divisions between the countries. When you say a single economy, it is a single market, and there are more and more measures taken sub-nationally on the European level. But we still have 27 economic policies. That makes particular the EU. I think it is not necessarily a weaker side.
Q: What is your comment on the rejection of the EU of this Hungarian plea for 240 billion dollar plan for the Eastern European countries?
K: It was not something concrete. I would say what the Hungarian prime minister who deposits his missile by the way meanwhile, he said that Eastern European, according to his analysis would need that amount of money. It was a principle door key. It was not something connected to the concrete mechanisms of the EU. Again the EU is helping. But EU is in the existing mechanism. I would say that they are good enough.
Q: Did this rejection raise any dissatisfaction among people in Eastern Europe against Western Europe?
K: No, we always discuss different plans to certain extent. We as Bulgaria, we would support the Hungarian proposals. In some other aspects, we will not support Hungarian proposals. There was another proposal by the Hungarian Prime Minister; this was to open the Euro zone for example, the single currency zone and to accept everyone who wants to be there. Economically, I would have some objections to that suggestion. When you have still economy that are quite divergent, it is very difficult to enter into a single currency mechanism. We still need, again, it’s about time, we need to live for sometime to close the economic gaps to converge economies and then to speak about the single currency.
16 of the 27 EU members have joined the euro club to date. However among the 16-euro users, only Slovak and Slovenia are from emerging economies. Facing the sharp currency devaluation, Poland and Hungary urged to replace their unstable currencies with the euro, but were denied.
Q: Do you think the current economic crisis is actually slowing down that process?
K: The current economic crisis is, for the time being, slowing down the process. But again, the crisis creates also opportunities. I wouldn’t be surprised if, the end of the crisis, the economies of these countries that have suffered more arenas in a better position, because we always have the balance between the economic needs and political considerations and public opinion. Sometimes, when you have more difficulties, you have the chance to overshoot, to go much further, otherwise, you will go if you don’t have that serious problem. I think that at the end of this crisis, again, if well managed, it’s going to be a difficult period. But it might open quite a lot of new opportunities.
Q: Do you think this is a good time to strengthen solidarity among EU members?
K: That is the time when solidarity has a meaning among the European members. It’s not needed to talk about solidarity when you don’t need it. When you need it, then we see the extent to which it functions, and again, I think that one of the core principles, basic principles of the EU is exactly solidarity.
Q: Are you seeing these countries coming closer to each other after this crisis?
K: I think so; I think the crisis is going to bring to a large convergence of the economies.