Eastern EU countries wary of economic "iron curtain"

BRUSSELS, March 1 (Chinese media) -- Eastern European Union (EU) countries were wary of an economic "iron curtain" at an extraordinary EU summit held on Sunday to seek a coordinated response to the economic crisis amid fear of protectionism.

"We should not allow a new iron curtain to be set up and divide Europe in two parts," Hungarian Prime Minister Ferenc Gyurcsany told reporters ahead of the summit.

Hungary was among the worst hit Eastern European countries in the financial crisis. Together with Latvia, the country has been forced to seek financial support from the International Monetary Fund (IMF).

"This is the biggest challenge for Europe in the last 20 years. In the beginning of the nineties we reunified Europe, now the challenge is whether we will be able to reunify Europe financially," Gyurcsany said.

The extraordinary EU summit was called when protectionism looms large within the 27-nation bloc. Split appeared between Eastern and Western European countries after the latter resorted to protectionist measures to save their industries from the worst economic crisis in decades.

"We do not want any new dividing lines; we do not want a Europe divided along a North-South or an East-West line; pursuing a beggar-thy-neighbor policy is unacceptable," said Czech Prime Minister Mirek Topolanek, whose country holds the EU rotating presidency.

The Czech people have been particularly incensed by French plans to offer public aid to carmakers Renault and Peugeot-Citroen on condition that they will commit not to lay off French workers, a condition seen as threatening jobs of workers in factories owned by the French automakers in Eastern Europe.

French President Nicolas Sarkozy added to easterners' concern with recent televised comments that appeared to directly criticize the French companies for investing in the Czech Republic and other nations where costs are lower than in France.

"Europe will only overcome the crisis if we act together in a coordinated way and if we abide by the community rules," said Topolanek. "That the internal market remains united is of vital importance."

Hours before the emergency EU summit, leaders from nine Central and Eastern European countries met separately to work on a common position against the rise of protectionism.

With the economic situation deteriorating in Eastern Europe, there is a mounting concern that a collapse of Eastern European economies could trigger further instability across the continent.

Gyurcsany called for a special EU fund of up to 190 billion euros (241 billion U.S. dollars) to bail out Central and Eastern European countries.

Among the sum, approximately 30 percent will be used to provide emergency liquidity to central banks of Central and Eastern European countries and Western European banks heavily exposed to the region, according to a proposal seen by Chinese media.