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The President of the European Union: US economic plans are 'a road to hell'

By B. John Zavrel



Czech Prime Minister Mirek Topolanek at the European Parliament in Strasbourg, France

(AP Photo/Christian Lutz)



STRASBOURG, France. The President of the European Union slammed President Barack Obama's plans to have the U.S. spend its way out of recession as "a road to hell," underscoring European differences with Washington ahead of a crucial summit next week on fixing the world economy.

The Czech Prime minister Mirek Topolanek, whose country currently holds the rotating EU presidency, told the European Parliament on Wednesday that Obama's massive stimulus package and banking bailout "will undermine the liquidity of the global financial market."

Also other European governments, led by France and Germany, say the focus should be on tighter financial regulation, while the U.S. is pushing for larger economic stimulus plans. But Topolanek's remarks are the strongest criticism so far from a European leader as the 27-nation bloc sticks to its position that its member countries are already spending enough to stimulate demand.

Theese remarks underline the difficulties that leaders may face coming up with a common approach at the April 2, 2009 summit in London among leaders of the Group of 20 industrialized and leading developing countries.

The host of the summit, British Prime Minister Gordon Brown, praised Obama on Tuesday for his willingness to work with Europe on reforming the global economy in the run-up to the G-20 summit. The United States plans to spend heavily to try and lift its economy out of recession with a $787 billion economic stimulus plan of tax rebates, health and welfare benefits, as well as extra energy and infrastructure spending. To encourage banks to lend again, the government will also pump $1 trillion into the financial system by buying up treasury bonds and mortgage securities in an effort to clear some of the "toxic assets"--devalued and untradeable assets--from banks' balance sheets.

Mr. Topolanek, the current president of the European Union, bluntly said that "the United States did not take the right path". He criticized the U.S.' widening budget deficit and protectionist trade measures--such as the "Buy America" policies included in the stimulus bill--although Obama has said that he opposes protectionism in principle. Topolanek said that "all of these steps, these combinations and permanency is the road to hell."

"We need to read the history books and the lessons of history and the biggest success of the (EU) is the refusal to go this way," he said. "Americans will need liquidity to finance all their measures and they will balance this with the sale of their bonds but this will undermine the liquidity of the global financial market," said Topolanek.



© PROMETHEUS 142/2009

PROMETHEUS, Internet Bulletin - News, Politics, Art and Science. Nr. 142, April, 2009