EU leaders to discuss stimulus plan, G20 summit

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(Xinhua)
Updated: 2009-03-19 21:41

BRUSSELS - European Union (EU) heads of state and government are to meet on Thursday and Friday to evaluate the efficiency of a 200-billion-euro (US$260 billion) economic recovery plan and to reach a common position for the upcoming G20 summit.

The recovery plan, put forward by the European Commission in November, demands EU member states expand public spending, cut value-added tax, and invest in infrastructure of the Internet and energy sector to mitigate the impact of the financial crisis.

The 5-billion-euro (US$6.5 billion) EU-level spending on energy and broadband infrastructure has proven to be the most contentious element of the recovery package.

EU foreign ministers failed to reach agreement on this issue earlier this week, leaving it to the top leaders of the bloc. The issue became sensitive as the money would have come from unused funds from the so-called Common Agricultural Policy.

A financial rescue plan for Central and Eastern European members of the EU, floated at an informal summit on March 1, seems to be dead.

Czech Prime Minister Mirek Topolanek, whose country holds the rotating EU presidency, rejected it on Thursday.

A rescue package would create "blocs" within the EU and provoke "useless panic on the markets," Topolanek was quoted by Czech media as saying. "We have unequivocally rejected bloc arrangements."

The EU leaders would also have to find a common position on the G20 summit as only a few EU member states will be participating.

On the eve of the EU summit, France and Germany demanded a revamp of the global financial system.

"The top priority is building up the new global financial architecture. The European Union must affirm a common position and take the lead in this process," French President Nicolas Sarkozy and German Chancellor Angela Merkel wrote in a letter on Tuesday to the Czech EU presidency and European Commission President Jose Manuel Barroso.

"The European Union shall propose that all hedge funds and other private pools of capital, which may pose a systemic risk, be brought under appropriate registration, regulation and supervision," they wrote.

The EU summit is expected to support the Franco-German position and finalize their "price list" for bargaining at the G20 summit.