EU leaders under pressure

March 19, 2009

, BRUSSELS, Mar 19 – EU leaders are set to rebuff calls to pump more taxpayer money into their ailing economies at a summit on Thursday and Friday focused on tackling the increasingly dire economic crisis.

Under pressure to do more to revive their economies, EU countries aim to form a common European front for a summit on April 2 in London of the Group of 20 biggest economic powers.

Washington has pressed its European allies in the run-up to the London meeting to play a bigger role in reviving global demand by doing more to prop up their own faltering economies.

While US calls have recently abated, EU governments still face pressure at home, with many companies and industries warning of sweeping job losses if the "green shoots" of recovery do not soon emerge.

European governments have mostly turned a deaf ear to calls for more action, insisting the London summit should have a firm focus on revamping the global financial architecture they put at the heart of current problems.

European Commission chief Jose Manuel Barroso insisted on Wednesday that Europe should focus more on implementing existing plans to revive the economy but encouraged governments that can afford more stimulus to go ahead.

"If member states are in a position to do more, they should do more," he told journalists, insisting however that more spending on social programmes should not threaten the health of public finances.

The 27-nation European Union has committed to economic stimulus measures in 2009 and 2010 worth 400 billion euros (520 billion dollars), equivalent to 3.3 percent of the bloc\’s gross domestic product.

The figure includes both national and EU level stimulus measures as well as automatic increases in social spending, such as unemployment benefits, which kick in when the economy weakens.

While no sweeping new stimulus efforts are on the cards, the EU leaders may consider making a further 10 billion euros in emergency loans available to struggling non-eurozone members, an EU presidency official said on Wednesday.

The leaders could consider "topping up" a 25 billion euro credit facility with the fresh funds, the official said.

Hungary tapped the credit line last year for 6.5 billion euros and Latvia is drawing 3.1 billion euros from it, using up nearly 10 billion euros.

With Romania seeking funds and others such as Lithuania likely to follow, some EU countries are in favour of lifting the overall 25-billion-euro ceiling to give a "political signal" of support, as one diplomat put it.

In December, the European Union more than doubled the amount of loans available through the credit line to 25 billion euros as many eastern European countries struggled to cope with the economic crisis.

EU leaders at the start of the month ruled out a regional package to bail out these countries as a group, opting instead for a case-by-case approach.

After months of wrangling, the leaders are also supposed to agree on a list of mainly trans-European energy infrastructure projects to benefit from five billion euros of EU funding.

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