Leaders of EU countries from central and eastern Europe will meet on 1 March ahead of an extraordinary summit on the same day with the bloc's other members, it emerged on Thursday (19 January).
Polish Prime Minister Donald Tusk has invited his counterparts from the Czech Republic, Slovakia, Slovenia, Romania, Bulgaria, Lithuania, Latvia and Estonia for the talks to ensure the 27-nation meeting on the financial crisis is not dominated by the interests of Western member states, Reuters reported.
Joaquin Almunia, the EU's economic and monetary affairs commissioner, expressed concern on Wednesday (18 February) in a speech over the sudden fall of currencies in some the EU's Eastern member countries.
The commissioner said he was worried about exhange rate volatility, referring to Poland, Hungary, Romania and the Czech Republic. Slovakia, by contrast, has already acceded to the euro, while the Bulgarian currency is pegged to the currency at a fixed rate and has therefore not suffered so far.
But Almunia's concerns were not shared by all of the EU's Eastern members. Czech Deputy Prime Minister Alexandr Vondra, whose country holds the EU's rotating presidency, said he saw "no grounds" for additional measures to combat the recession. The Czech Republic, Vondra said, was not affected by the financial turmoil, because the Czechs are conservative people who do not take up many loans.
Indeed, the Czech Republic is not doing badly so far, he added, while its currency, the crown, is stable at around 29 crowns to the euro. Miroslav Singer, the vice-governor of the Czech national bank, said on Wednesday that the crown was even likely to strengthen against the euro in the near future. However, Czech Prime Minister Mirek Topolánek cautioned that his country may break the Maastricht deficit criterion, a prerequisite ahead of the adoption of the euro.
A shortcut to the euro?
In Poland, the government recently threw down the gauntlet, suggesting that East European countries should be given a shortcut to join the euro under the same conditions as current eurozone members, which were allowed to depart from the rules laid down in the Stability and Growth Pact.
Zbigniew Chlebowski, a Polish official and a figure of the ruling Civic Platform (PO), said his country was speeding up its entry into the exchange rate mechanism (ERM-2), a prerequisite for entering the euro. The move would be made without making constitutional changes claimed by the main opposition party Law and Justice. Last year, Warsaw unveiled a plan to join the signle currency in 2012.
However, many analysts find these objectives over-ambitious. The Polish zloty, the rate of which was previously stable at above three zloty to the euro, is now approaching five zloty per euro.
Each country a unique case
In Hungary, the currency rates have deteriorated, although to a lesser extent. The exchange rate before the crisis was stable at 250-260 forint for one euro, and is now at 306 and increasing.
The country's prime minister, Ferenc Gyurcsány, also spoke about the country joining the euro zone, which he said could happen between 2012 and 2014 if Hungary can complete its reform of the public sector and maintain a sustainable budget.
In the Slovak Republic, a recent eurozone member (EurActiv 05/01/09), the economic situation looks better, although the country, an important manufacturer, is hit by a sharp drop in foreign demand.
Zdenko Štefanides, chief economist at VUB, a Slovak bank, predicted a 3% growth in 2009. "But there is still risk of going down," he stressed. Štefanides also said that the country's eurozone membership significantly helped to cope with the economic crisis. "Compared to other countries we have a stable package of financial assets," he commented.
In Romania, the national currency, the leu, has lost about 20% of its value in the past year. After hovering at about 3.5-3.7 lei to one euro from 2005 to late 2008, the Romanian national currency fell steeply in December 2008, dropping to 3.9 lei to the euro. In January 2009, the leu even touched its historical depreciation value of 4.3 for one euro. It is now headed up to 4.2.
Unemployment is set to grow to more than 5% this year, the government predicts, with thousands of layoffs in the automobile and other industries.
Romania's top banking official, Mugur Isărescu, said on Wednesday he was considering an IMF loan, adding that the package would include EU funding. But he did not say how much the country would seek.
More detail was provided by a representative of Societé Générale in Romania. Romania could need 4-6 billion euro in the event of an adjustment and external financial aid, and most of this amount should be directed towards stabilising the banking sector, said its vice-chief economist Ariel Emirian, quoted by Agerpres.
Emirian believes that Romania is not in a situation of economic collapse, as it remains in a much better position than other countries in the region. "I do not believe in a financial crash in Romania. It is not in the same situation as Hungary," Emirian said.
In Bulgaria, where a currency board was introduced in 1997 and where the national currency, the lev, was pegged first to the German mark and then to the euro, the country appears to be resisting the crisis better than most of the Eastern European EU members.
After advising Bulgaria to better control "the nervousness of markets," Economic Affairs Commissioner Joaquin Almunia even praised Bulgaria in his speech, saying "please continue as you have been doing".
But as Dnevnik, EurActiv's partner in Bulgaria, wrote yesterday, the Commission warned Sofia against raising salaries in the public sector. The warning came only hours after the government made its intentions public. General elections are to be held in a few months, at a date which has not yet been set.
More details about the Commission's assessment and recommendations to Bulgaria, the Czech Republic, Estonia, Hungary and Poland are available here.