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EU split over climate change plans during meltdown (AP)

By PAUL AMES, Associated Press Writer 5 minutes ago

BRUSSELS, Belgium - European Union leaders were deeply divided Thursday over calls by Poland, Italy and other countries to dilute and delay an ambitious program to fight global warming to take account of the looming economic downturn.

On the second and final day of the bloc's summit in Brussels, the leaders were expected to confirm their approval of a euro1.7 trillion ($2.3 trillion) emergency bailout for the banking sector and call for a concerted global approach to revamp the world's financial system to prevent a repeat of the crisis that devastated money markets in recent weeks.

As the financial turmoil spills over into the real economy with signs that a prolonged global recession is looming, the leaders indicated support to the banking sector could be extended to other sectors.

Poland and six other Eastern European nations infuriated other EU nations with a surprise demand that the bloc drop a December target for adopting plans to reduce greenhouse gas emissions by 20 percent by 2020.

They say the financial crisis has made it too difficult for European industry to take on the burden of adapting to a clean economy. Italy also threatened to veto the climate change plan unless its industries are given more protection.

"Our companies are in no state to take on costs like those we thought about last year," Italian Prime Minister Silvio Berlusconi told reporters late Wednesday.

French President Nicolas Sarkozy — who currently heads the EU — was adamant that the economic crisis should not derail the climate change targets adopted last year. He said the bloc's credibility was at stake.

"We cannot go back on our objectives," he told a news conference. "It's absolutely essential ... we must stick to the calendar."

Poland, Hungary, Bulgaria, Latvia, Lithuania, Romania and Slovakia however urged that the bloc drop the December deadline for drawing up the plan explaining how the cuts will be made. The poorer Eastern European nations fear their coal-based energy sectors will suffer unfairly.

The plan would cost governments and business billions of euros (dollars) to implement new cleaner technologies, renewable energy sources, and reduce emissions from cars and factories. Berlusconi said that would put Europe at a disadvantage to competitors in China and the United States.

Sarkozy countered that taking a world lead in switching to green energy would bring economic advantages to Europe.

The 27 leaders were also divided over how to handle Russia.

France, Italy and Germany want to quickly resume cooperation talks with Russia following the pull back of Russian troops from much of Georgia, but Sweden and many Eastern European nations say Moscow must first give further proof it is sticking to peace deal commitments.

A draft summit statement obtained by The Associated Press said the EU leaders expressed their "determination to take the necessary steps to react to the (economic) slowdown in demand and the contraction in investment, and in particular to support European industry."

They called for EU headquarters to come up with firm ideas by the end of the year. European car makers are looking for a a euro40 billion (US$54.5 billion) bailout fund to offset falling sales.

Sarkozy said late Wednesday that EU leaders "without exception supported" the bank bailout plan agreed by the 15 euro-zone nations plus Britain last weekend.

Sarkozy will head to Washington with President George W. Bush at the weekend to push European calls for a thorough reform of the world financial system that will "fundamentally reform capitalism."

He wants a meeting of the world's biggest economic powers in November, possibly in New York, to plot an overhaul of the financial markers. Sarkozy said it would aim to emulate the achievements of the 1944 meeting in Bretton Woods, New Hampshire which set out the rules of international trade and financial relations.

"We are going to have new Bretton Woods, we are going to reconstitute the system," Sarkozy said. "We all agreed that we don't want the same causes to produce the same effects in the future."

For the first time, EU governments took a step toward European supervision of banks. They said national watchdogs need to meet at least once a month. They also set up a financial crisis cell to swap information.

Regions : Europe

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