Merkel rejects bailout plan for eastern EU nations

BRUSSELS — Germany rejected appeals Sunday for a single multibillion euro (dollar) bailout of eastern Europe, even after Hungary begged EU leaders not to let a new "Iron Curtain" divide the continent into rich and poor.

The swift, strong comments by German Chancellor Angela Merkel dampened hopes that leaders at Sunday's European Union summit could forge a unified stance to tackle the global economic crisis.

As Europe's largest economy, Germany has been under rising pressure to take the lead in rescuing eastern EU members, but Merkel insisted that a one-size-fits-all bailout was unwise.

"Saying that the situation is the same for all central and eastern European states, I don't see that," said Merkel, adding "you cannot compare" the dire situation in Hungary with that of other countries.

Hungarian Prime Minister Ferenc Gyurcsany, saying the credit crunch was hitting the eastern members hardest, had called for an EU fund of up to euro190 billion ($241 billion) to help restore trust and solvency in those nations.

"We should not allow that a new Iron Curtain should be set up and divide Europe," Gyurcsany told reporters. "In the beginning of the nineties we reunified Europe, now the challenge is whether we will be able to reunify Europe financially."

EU nations are all grappling with a worsening recession, compounded by a severe credit crunch that has left many EU countries looking ever more inward to protect jobs and companies from international competition. Those policies are now undermining the open market cornerstone on which the EU is founded.

Ahead of the summit, the leaders of nine countries — Poland, Hungary, Slovakia, the Czech Republic, Bulgaria, Romania and the three Baltic states — forged a common stand to pressure richer members in the 27-nation bloc to back up vague pledges of support with action.

Polish Prime Minister Donald Tusk said the nine leaders called for "a spirit against protectionism and egoism."

Hungary, Poland and the Baltic countries of Estonia, Latvia and Lithuania also want the EU to fast-track their bids to join the euro-currency, which could offer them a stable financial anchor. Latvia's government has already collapsed amid the economic fallout.

Other EU members, like Sweden, want to coordinate a Europe-wide bailout plan for car producers.