Wednesday, June 10, 2009
Wednesday, June 3, 2009
Who's your daddy?
Youngest national leaders
Who's your daddy?
The youngest political leaders around the world
THIS week reports emerged from North Korea suggesting that Kim Jong Il wants his youngest son to succeed him as leader of the country. Nothing is certain about the Hermit Kingdom, but the little-known Kim Jong Un is notable for his relative youthfulness. At 25 (perhaps 26) he is several years younger than any serving head of government today. Getting to the top early is harder to achieve in a democracy, although some tiny or eastern European countries have a fondness for electing sprightly leaders. In Congo Joseph Kabila, whose precise age has been disputed, took over from his father Laurent (who was assassinated) even though his youthful appearance was considered a handicap. The youngest current leader, Andry Rajoelina, became president of Madagascar this year after staging a military coup.
Monday, May 11, 2009
Social Conservative Leaders Feel Scapegoated
Social Conservative Leaders Feel Scapegoated
By David Paul KuhnThere is a brooding sense within top social conservative circles that they have become the revolving scapegoat of the Republican Party. Many of the longtime leaders of the Christian right, from Richard Land to Tony Perkins to Gary Bauer, expressed resentment in extended interviews with a singular theme: that the most loyal GOP bloc has been so quickly thrown under many critics' bus.
"There are powerful interest groups in the party and in the country that are trying to scapegoat social conservatives," Land said, who has long served as a bridge between Southern Baptists' political concerns and GOP leadership. "It's people who have no problem ignoring facts."
Social conservatives have proven perhaps the most loyal Republicans. The September 15th economic crisis brought Democrats to new ground across red America. States from Indiana to Florida to North Carolina shifted to Barack Obama after the market crash. In this last chapter of the campaign Obama made inroads with GOP strongholds like white men.
But social conservatives did not budge. Only 29 percent of whites who attend church weekly backed Obama. That is the precise portion who voted for Al Gore and John Kerry. Half of all Americans who voted for John McCain were weekly church attendees. White evangelicals or born-again Christians comprised 42 percent of the GOP vote, according to exit polls.
Despite their loyalty to the GOP, traditionally, after national losses, social conservatives feel like the whipping boy of GOP critics.
"The party alienated too many Americans by allowing social conservatives to dominate," read one New York Times article shortly after Bill Clinton won in 1992. To win, "we're going to have to take on the religious nuts," argued a GOP strategist after Clinton's reelection four years later.
"That's the pattern that has emerged over the last couple of decades," said Perkins, who heads the Family Research Council. "People want to find an easy excuse for the GOP's failures and they try to point to the social conservative issues and by extension social conservatives."
Today, many social conservatives believe that this pointing is more pervasive.
There was Chris Matthews recently grilling Indiana Rep. Mike Pence, chairman of the House Republican Conference, over whether he believes in creationism.
There was the first gathering of top Republicans this month to talk about the future of the GOP. Notably absent from the conversation led by Virginia Rep. Eric Cantor, a top House Republican, former Florida Gov. Jeb Bush and former Massachusetts Gov. Mitt Romney, was talk of cultural issues like abortion.
At an April gathering of Log Cabin Republicans, a gay GOP organization, McCain's 2008 campaign manager Steve Schmidt urged Republicans to support gay marriage. Schmidt's speech was a widely publicized break with one of social conservatives two primary political concerns.
"The Republicans deserve to lose elections under the rule of 'too-stupid-to-govern' if they choose the Log Cabin constituency over social conservatives," Land said of Schmidt's speech.
Social conservatives also contend with Schmidt's, among others, broader inference that the GOP is becoming a fundamentalist religious party.
"You put public policy issues to a religious test, you risk becoming a religious party," Schmidt said in his speech.
Conservative Christian leaders argue that they don't tout veto power over the GOP. McCain was not their top choice in the 2008 Republican primaries, they note.
"Social conservatives are not the gatekeeper of the Republican party," Bauer said, a longtime Christian conservative leader who served as Ronald Reagan's chief domestic policy adviser.
At the same time, social conservatives face a cultural hurdle with younger voters. Voters under age 30 are slightly more conservative on the abortion issue than earlier generations. But young people are more liberal on gay rights issues.
McCain's daughter, Meghan, personifies this generational tension. "I am a pro-life, pro-gay-marriage Republican," she describes herself.
Voters under age 30 are more likely to believe abortion should be illegal than voters age 30 to 64, by a margin of 48 to 41 percent, according to the April poll by the Pew Research Center--a trend Pew polling also found in 2008. Pew polling in recent years has also shown that younger voters are less likely to oppose gay marriage.
Still, overall, it does seem peculiar that in this year, of all years, discussion of the GOP's minority status has centered mostly on moving away from cultural conservatives.
Not since 1980 has the economy so dominated a presidential campaign, based on the portion of voters who selected it as their primary issue in exit polls. Sixty-three percent of voters said the economy was their top issue. A Pew post-election media report found that social issues--like abortion or gay marriage--constituted less than one percentage point of all campaign news, surely a low since the beginning of the Reagan era.
On Election Day, in one of the few metrics of national cultural debates, a majority of voters in California, Arizona and Florida approved bans on same-sex marriage.
More recently, Pew polling found in late April that the American public has actually become slightly more conservative on cultural issues like abortion and gun control. Other polls show the public view of abortion remaining steady. At minimum, it's clear Americans are as divided as ever on the issue.
A recent CNN/Opinion Research Corporation poll found that by a margin of 49 to 45 percent, the public considers itself more "pro-choice" than "pro-life." Though significantly, amid talk of cultural moderation, two-thirds of Republicans said they were "pro life" in the poll.
The same-sex marriage debate particularly poses a regional cultural hurdle for the GOP. Rhode Island may soon be the sole New England state where same-sex marriage is not legal. Legislators in Maine and New Hampshire recently voted to legalize gay marriage.
Washington D.C. legislators also recently voted to recognize same-sex marriages in other states. Gay marriage advocates have gained ground perhaps nowhere more visibly than in Iowa. An Iowa Supreme Court ruling in April made Iowa the first state in the nation's heartland to allow same-sex marriage.
Many conservative Christian leaders do acknowledge that in more socially liberal regions of the country like New England, the GOP cannot have a strict cultural litmus test on social issues.
"Republicans in those moderate districts have to choose the Republicans that most represent their views," Land said, when asked by me if Republicans running in more culturally left-leaning constituencies should be opposed by cultural conservatives.
Debate over gay marriage has particularly placed cultural conservatives in an awkward position. They bristle at assertions that their opposition is comparable to opposition to blacks' civil rights in the sixties or that their position is radical.
The CNN poll shows that a majority of voters, including a majority of independents, believe same-sex marriages should not be legal. Yet in the sixties, a majority of Americans also opposed the pace of civil rights reforms.
Social conservatives emphasize however that their opposition to same-sex marriage is shared by Obama, as well as other top Democrats like Hillary Clinton.
Cultural conservatives were especially riled recently by the debate over whether California's Carrie Prejean was denied the national crown in the Miss USA pageant because she said, when asked, that marriage should be between a man and a woman.
"I have not been able to find a difference between Barack Obama's position and Miss California's position," Bauer said. "But Miss California is being smeared and Barack Obama is seen as a hero by that community."
The coming Senate hearings over the nomination of a new Supreme Court justice will likely further ratchet up the cultural debate.
There is some chatter in circles of moderate Republican strategists that the GOP should stay with cultural conservatives on rhetoric but shy away on policy. If that occurs, Land said, "Republicans delude themselves to thinking that social conservatives will have no where else to go."
In the end, the GOP leadership will likely not move away from social conservatives anytime soon. They are aware of the coalition math. A divorce between the Christian right and the GOP would leave Republicans in ruin.
This is why, despite the heightened rhetoric today, Bauer is skeptical of any divide between the GOP and its largest bloc.
"I'm not concerned that they could actually be that stupid," Bauer said. "There are whole areas of the country where the only reason the Republicans are competitive are because of values and social issues."
More from RCP - 10 Senators Who Switched Parties
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David Paul Kuhn is the Chief Political Correspondent for RealClearPolitics and the author of The Neglected Voter. He can be reached at david@realclearpolitics.comSunday, April 5, 2009
Thursday, April 2, 2009
Credit Crisis Fools Latin America's Leaders
Commentary by Alexandre Marinis
Oct. 21 (Bloomberg) -- The world financial crisis will lead to an important relocation of wealth across the globe. Not all emerging markets are poised to take advantage of it.
Latin America's historic economic deficiencies, such as overdependence on commodity exports and severe budget constraints, are now combining with the rebirth of a flawed pro- government, anti-market mentality. If translated into economic policies, these weaknesses will hurt productivity, foster corruption and jeopardize the chances of Latin America strengthening its role in the global economy.
From 1970 through 2007, Latin America's share of worldwide gross domestic product remained unchanged at a 5.7 percent, while Asia boosted its share from 18 percent to 29 percent, according to United Nations data.
In three decades, China increased its participation in the global economy sixfold, from less than 1 percent in 1980 to 5.9 percent in 2007, while India's share more than doubled, to 2.6 percent. Latin America wasn't nearly as successful. As a share of the world's economy, Brazil fell from a peak of 2.4 percent in 1980 to 2.1 percent last year, Mexico from 1.4 percent to 1.2 percent, and Argentina from 0.94 percent to 0.77 percent.
These figures should be a wake-up call to Latin Americans. Between 2003 and 2007, the region was beguiled by what I like to call the four C's: Commodities, Commerce, Currency and Credit.
The price of commodities surged, boosting commerce and generating hefty trade surpluses. The overflow of foreign capital strengthened local currencies, allowing countries to repay foreign debt and accumulate international reserves. And while the region didn't manage to bump up its share of the world economy, it did achieve an improved credit stance that helped finance an expansion greater than the mediocre performance of the 1980s and '90s.
In Reverse
As soon as the U.S. real estate bubble burst and financial markets began to melt, the mechanics of the four Cs reversed and Latin Americans confronted a harsh reality. Commodity prices plunged, trade and current accounts worsened, foreign capital fled, currencies weakened and as credit dried up, so did investments.
Regardless of how Latin America's politicians try to spin it, the reversal of the four Cs will make it difficult for the region to maintain a positive economic outlook. The many leaders who suggest that growth won't stumble are denying history.
Between 2000 and 2001, as the dot-com bubble burst and the annual growth rate of the U.S. economy slowed from 3.7 percent to 0.8 percent, Brazil slumped from 4.3 percent to 1.3 percent, Mexico from 6.6 percent to zero, while the recession in Argentina deepened. Other emerging markets didn't fare well, either. Russia's growth rate was cut in half, India's by one fourth. China's growth rate in 2001 was the lowest of the past eight years.
More Government Spending
Many Latin American countries are now determined to increase government spending as a means to meet expectations, keep investments afloat and sustain economic growth. Mexico's 2009 budget bill proposes the first fiscal deficit in four years and the largest shortfall since 1990. The Brazilian government is forecasting next year's tax revenues based on a growth rate of 4.5 percent, even though market analysts forecast growth of 3.35 percent or lower.
Watching highly indebted Latin nations increase government spending as a global recession looms should raise eyebrows, as well as questions:
Do the governments have enough resources to sustain growth in a credit crunch? Is that even possible? What will happen to tax revenues as economic growth slows? How will the region's debt dynamics respond? How would rating companies react to Latin America's debt spiraling out of control?
Nationalized Banks
What makes these questions more disturbing is that many Latin American presidents seem to view the recent nationalization of banks worldwide -- an act of desperation forced by the credit crisis -- as justification to increase the size of the government even more.
``I nationalize strategic companies and get criticized, but when Bush does it, it's OK,'' Venezuelan President Hugo Chavez said on Sept. 21. He added, ``Bush is turning socialist. How are you, Comrade Bush?''
Addressing the United Nations General Assembly on Sept. 23, Argentina President Cristina Fernandez de Kirchner summarized the dominant sentiment among Latin leaders today: ``We were told that the market would solve everything, that the state was not necessary, that state intervention was nostalgia of groups that had not understood how the economy had developed.''
Latin Americans can't let themselves be fooled by ideologies, dogmas, bitterness or a sense of revenge. If it is true that banking crises have always required government intervention, it is also true that governments can't replace markets as the most efficient way to allocate scarce economic resources. From government, markets need regulation and supervision, not opposition.
If Latin American leaders continue to mistake today's events as an opportunity to bloat government -- while Asia goes in the opposite direction, with China allowing farmers to lease and exchange land -- Latin America will be doomed to an insignificant piece of the world's wealth pie for many years to come.
Wednesday, April 1, 2009
Why G20 leaders will fail to deal with the big challenge
Why G20 leaders will fail to deal with the big challenge
By Martin Wolf
The summit of the Group of 20 leading high-income and emerging countries in London on Thursday seems set to achieve progress. But achievement must be measured not just against past performances, but against “the fierce urgency of now”. Unfortunately, it will come up short.
The Organisation for Economic Co-operation and Development now forecasts a 4.3 per cent contraction in the economies of advanced countries this year, followed by stagnation in 2010. In advanced member countries, joblessness may rise by 25m by 2010. Meanwhile, the International Monetary Fund forecasts that the global economy will shrink by between 0.5 and 1 per cent this year. This would be an increase in the “output gap” (gap between actual and potential output) of some 4 per cent.
Will the G20 rise to these exceptional challenges? No, is the answer. What is needed is both a large increase in aggregate demand and a shift in its distribution, away from chronic deficit countries, towards surplus ones. On both points, progress will be far too limited.
The OECD argues that the discretionary stimulus measures taken by governments in response to the crisis will on average boost gross domestic product by just 0.5 per cent in 2009 and in 2010. In addition, the extra demand is coming at least as much from deficit as from surplus countries. This is not a recipe for resolution of global imbalances, but for their indefinite prolongation.
Unfortunately, no consensus exists on the underlying causes of this crisis or on the best ways to escape from it. The US and UK agree that the excesses of the financial sectors have their roots not just in deregulation, but also in the massive excess supply of surplus countries, of which China, Germany and Japan (with respective current account surpluses of $372bn, $253bn and $211bn in 2007) are the most significant. But China and the continental European countries, led by Germany, argue it is all the fault of profligate deficit countries. Yet China also hopes that the world will soon be able to absorb its excess supply again.
In last week’s FT interview with Angela Merkel, the German chancellor said that: “The German economy is very reliant on exports, and this is not something you can change in two years.” Moreover, “It is not something we even want to change.” To paraphrase: “The rest of the world needs to find a way of absorbing our excess supply, but sustainably, please.” Yet what happens if that cannot be achieved for the excess potential supply of all surplus countries together? In 2007, the three countries ran current account surpluses of $835bn (€629bn, £585bn). Logically, counterpart deficit countries must spend that much more than their incomes. Yet today deficit countries have run out of willing and creditworthy private borrowers.
That change is what this crisis is all about, as the charts show. Between 2007 and 2009, the crisis-hit private sectors of the US, UK and Spain will, on these forecasts, shift their financial balances (the difference between their incomes and expenditures) massively towards surplus, as savings rise and spending is cut. In Spain, the shift is forecast to be 11.7 per cent of GDP. The main offsets in these deficit countries will be huge jumps in fiscal deficits, although the current account deficits are also, inevitably, shrinking.
Surplus countries, which relied on the private sectors of deficit countries to do their irresponsible borrowing for them, show a very different pattern: their private sector balances will change rather little and, in all cases, will be in large surplus throughout: big current account surpluses nearly always mean private sector excess savings. But, as their external surpluses shrink, fiscal deficits will grow, partly because of deliberate policy but also because of the automatic consequences of recessions.
So fiscal positions are deteriorating and current account surpluses and deficits are dwindling everywhere, as the private sectors of deficit countries cut back their spending dramatically. But the expected fiscal deterioration is bigger in the deficit countries than in the surplus ones. With the exception of Japan, the fiscal deficits will also be bigger in the deficit countries. The small size of the expected shift in China’s fiscal deficit, the modest level of its 2009 fiscal deficit and the persistence of the massive surpluses of its private and state-owned enterprise sector are striking. This is a country expecting (or at least hoping for) a recovery in external demand.
What this analysis is telling us is quite simple: next to no adjustment in underlying structural imbalances is occurring. In particular, the non-fiscal sectors of the three big surplus countries are expected to continue to run huge surpluses. The change – temporary, the surplus countries surely hope – is that domestic fiscal expansion is modestly offsetting the decline in demand coming from deficit countries with over-leveraged private sectors. But that decline in private demand is also offset by massive fiscal boosts in deficit countries.
This is not a path towards a durable exit from the crisis. It is a path on which the fiscal deficits needed to offset persistent current account deficits, and collapsing private spending in external deficit countries, continue indefinitely. Unless and until surplus countries recognise that this cannot continue, no durable escape from the crisis will be achieved. Understandably, but foolishly, they are unwilling to do so.
So what is to be done? That must be a central agenda item of the next G20 summit. The world economy cannot be safely balanced by encouraging a relatively small number of countries to spend themselves into bankruptcy. The answer lies partly in changing the policies of surplus countries. But it lies as much in rethinking the international monetary system. The case for sizeable and ongoing allocations of special drawing rights – the IMF’s reserve asset – is powerful, as, among others, Zhou Xiaochuan, governor of the People’s Bank of China, has argued in a fascinating recent paper*. I hope soon to return to this huge challenge and opportunity. In the meantime, the G20 summit is largely dealing with the immediate symptoms of the illness. Finding a longer-term cure for chronic global excess supply still lies ahead.
Monday, March 2, 2009
What Obama should tell leaders of the Group of 20
What Obama should tell leaders of the Group of 20
By Martin Wolf
The London summit of 1933 marked the moment at which co-operative efforts to manage the Great Depression collapsed. The summit of the Group of 20 countries, in the same city, on April 2, must turn out quite differently. That may seem a simple task. It is not. The usual platitudinous communiqué would be a catastrophe.
The world now needs change it can believe in. Only Barack Obama, the US president, can provide the desired leadership: he is untainted, popular and leader of the country that, for good and ill, remains central.
The opportunity for Mr Obama is now, as the G20 “sherpas” prepare the draft text. He needs to write urgently to his fellow heads of government. Something like this would be perfect.
“My fellow leaders, Franklin Delano Roosevelt abandoned his London summit. I wish to make ours the moment at which we save ourselves. Let us resolve to bequeath renewed prosperity to posterity, not a collapse of the global economy we inherited.
“Let me get a big point out of the way: yes, the US messed up. We thought we knew about sophisticated modern finance. We were wrong. On behalf of my country, I apologise. But this disaster did not happen on my watch. So let us move past the “blame game”. We must learn the lessons and look ahead, not backwards.
“We are in a dire state. In the fourth quarter of last year, gross domestic product shrank at an annualised rate of 20.8 per cent in South Korea, 12.7 per cent in Japan, 8.2 per cent in Germany, 5.9 per cent in the UK and 3.8 per cent in the US. Even China’s economy stagnated. Industry has been particularly hard hit: the latest year-on-year declines in industrial output were 21 per cent in Japan, 19 per cent in South Korea, 12 per cent in Germany, 10 per cent in the US and 9 per cent in the UK. In brief, the world is in deep recession.
“The Washington-based Institute for International Finance also forecasts a collapse in net private capital flows to emerging countries, from $929bn in 2007 to a mere $165bn this year. Credit flows are forecast to shrink by $30bn. The International Monetary Fund also forecasts a decline in the volume of world trade this year.
“Behind all this is a collapse in paper wealth and breakdown in credit (see chart). Profligate deficit countries may have created these viruses. They are not the most vulnerable to it.
“So what must we now do?
“First, we must set priorities. I note with consternation Europeans’ obsession with regulating hedge funds and tax havens. Did they cause this crisis? No. Europeans also call for regulation of all markets, products and participants, without exception. This is like calling for research into radar while the Titanic sinks. Do they realise that the systemically significant banks at the heart of this crisis are the most regulated institutions we possess? Let us not be diverted from today’s priorities.
“Second, the highest priority is to halt the free-fall in demand. Nobody can now still imagine this is somebody else’s problem. I have acted and, if necessary, will do so again. You must also do so, within your own constraints. The surplus countries have the biggest room for manoeuvre. China is showing the way. Let Germany and Japan follow. We all need temporary targets for demand growth, to be monitored by the International Monetary Fund.
“Third, we must fix our financial systems. I am far from content with what my administration has achieved. But we will learn. So must you. Toxic assets are no longer just a pile of securitised subprime US mortgages. If we do not act, we are going to find bad debt everywhere. We have to agree on common approaches to recapitalising financial systems and restoring credit, in order to prevent costly spillovers on to one another.
“Fourth, we must avoid both protectionism and false pieties. We must recognise two harsh realities.
“One is that, with taxpayers called upon to rescue financial institutions, finance will be more domestically directed. We also now know that only big countries can afford to insure global institutions. We must minimise the damage done by this upheaval.
“Another reality is that if the US is unable to expand its exports, pressure will grow to restrict its imports, instead. For deficit countries that are trying to save more than before, as critics rightly insist they should, an improvement in net exports is now essential. We cannot employ exceptional fiscal and monetary measures forever, thereby risking destruction of our government’s creditworthiness and our currency’s value. Surplus countries will need to accommodate these essential adjustments through expansions in demand, relative to potential supply. In a trade war, surplus countries have most to lose. This should not be viewed as a threat, but as a warning.
“Fifth, to get through this crisis and improve the functioning of the entire global system we need much larger, more effective and more legitimate international insurance and monitoring systems. The starting point has to be with a big increase in the resources of the International Monetary Fund and restructuring of voting rights in the institution. It is ridiculous that European countries possess about a third of the votes.
“European leaders have called for a doubling of IMF resources to about $500bn. But, in a world with $7,000bn of foreign exchange reserves, the IMF’s resources need to be an order of magnitude bigger than today. I would support a large-scale issuance of special drawing rights – the IMF’s own reserve asset – and a big shift in voting rights, too. The emerging countries that rely on its insurance need a bigger say in how the IMF and other global institutions function. With such an improved system of insurance, not only will it be possible for emerging countries to run current account deficits more safely in future, but they will not be forced to cut back savagely on spending now.
“As Morris Goldstein of the Washington-based Peterson Insititute for International Economics argues, we need a “grand bargain” – a phrase picked up by Gordon Brown, the UK’s prime minister. The core of that bargain is surely clear to us all.
“Finally, we must put in train comprehensive reform of the structure not just of regulation, but of global finance itself. We need to push this process forward in London. But the challenges are too complex and the danger of unintended consequences too great to fix all this right now.
“So let us focus our efforts on the crisis before us. In the words of Abraham Lincoln, let us be touched by “the better angels of our nature”. Yet we need fight no war. On the contrary, the aim is to strengthen a peaceful and co-operative economic order. We must merely rise above petty concerns. The challenge is now; we must resolve to meet it together.”
Ailing in the east
The European Union
Ailing in the east
European Union leaders decline to bail out eastern Europe
EUROPEAN UNION leaders have rejected calls for a special €180 billion ($229 billion) rescue fund for ex-communist countries in east and central Europe. Leaders gathered in Brussels on Sunday March 1st for an emergency summit to discuss the economic crisis dismissed suggestions, led by Hungary, that a single plan was needed to save the region. Without massive help for ex-communist nations, Hungary’s prime minister, Ferenc Gyurcsany, had said, a “new Iron Curtain” risked splitting the continent anew.
But Angela Merkel, the German chancellor, squashed talk of a dedicated plan for eastern Europe, saying the ten ex-communist countries in the EU faced “very different” degrees of peril in this economic crisis. It was ill-advised to throw “massive figures” around, added Mrs Merkel. Hers is a voice that counts: Germany pays more into EU coffers than any other nation.
In Brussels, it was seen as highly significant when German ministers signalled last month that they might be prepared to step in to prevent a country defaulting within the 16-member group that shares the single currency. But a dedicated bail-out for the ten ex-communist countries that have joined the EU since 2004 is clearly a step too far. Germany will hold federal elections later this year, and voters there are acutely sensitive to suggestions that Germany and other rich nations should bail out weak or profligate members of the European club.
The German chancellor was one of several western leaders who also dismissed calls to ease the rules that govern membership of the single currency. Some eastern European governments would like to see the two-year probation period for prospective members cut short, to allow them to enjoy the sheltering embrace of the euro sooner. Mrs Merkel held out only the prospect of speeding up access to a preliminary stage of monetary union, in which countries peg their currencies to the euro.
Nobody doubts that several members of the former communist block are in desperate economic straits: Latvia and Hungary have already received billions of euros in EU stabilisation funds as part of bail-out plans organised by the International Monetary Fund. The fate of the newcomers is of acute interest to those western countries whose banks have invested heavily in the east, including Austria, Greece, Italy and Belgium. Further north, Scandinavian banks are heavily exposed in the Baltic republics.
There has been much rhetoric in the days running up to Sunday’s summit about the need to avoid splitting Europe along east-west lines, including from the meeting’s formal host, the Czech prime minister, Mirek Topolanek, whose country holds the current EU rotating presidency.
But in the end for very different reasons, a consensus formed among EU leaders that such talk is dangerous. For countries like Poland or the Czech Republic, whose economies are in relatively robust shape, there are strong arguments against allowing the impression to form that there is a single disaster area in the east of Europe, which worldwide investors enter at their peril.
Mr Topolanek invited fellow leaders to stress instead the importance of Europe’s single market, with its competition rules and founding principles of free movement of workers, goods, capital and services within the EU. Everyone at the summit understood the reference: eastern European governments were appalled when the French president, Nicolas Sarkozy, last month suggested that French carmakers should promise not to shift production out of France in exchange for €6 billion in cheap loans. In a television interview, Mr Sarkozy had added that it was “unjustified” for firms like Renault or Peugeot to make cars in places like the Czech Republic, for sale in France.
Mr Sarkozy originally wanted to call a summit of heads of government from the 16 nations that use the euro, but his idea was rejected by Mrs Merkel, in favour of a gathering of all 27 nations, chaired by the Czech Republic (which does not use the single currency).
Perhaps understandably, the French president was on prickly, defensive form, insisting he was opposed to protectionism, and saying France should in fact be “thanked” for making a million cars a year in overseas factories, many of them in eastern Europe. The French car plan has now been approved by European Commission regulators, who said they had been assured that French car firms were free to produce cars where they wished.
Others remained keen to make a point. Gordon Brown, the British prime minister, told the summit that protectionism was a “road to ruin”. It was not clear if his joke was intentional.
