Word: european
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...report authored last month by Katinka Barysch, of the Centre for European Reform think-tank, says they were merely following E.U. recommendations: opening their markets to trade and investment and selling their local banks to western European ones. It helped to drive the export boom of the past five years but left them more vulnerable to the crisis. Western banks have lent $1.6 trillion to Eastern Europe, but the crisis could see them pull back yank credit lines from their local subsidiaries, triggering a domino effect of collapsing financial institutions...
...Respite of sorts came to the region last week when a $31 billion package was announced by the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank. But World Bank President Robert Zoellick says East European banks need $140 billion of fresh capital, much of which may have to come from Western Europe...
...come up with an effective answer? Its fudged response so far is partly down to a lack of institutional architecture: the European Central Bank, for example, has far fewer resources than the U.S. Federal Reserve, while the European Commission can only work with the budget provided by E.U. member states. At the same time, leaders like Sarkozy, Merkel and Brown have been too busy putting out fires at home to provide strong leadership out of the crisis...
...Eastern Europe now fears the narrow instinct of individual governments will be to look to their own backyards first, only thinking of the European dimension as an afterthought. Without any clear direction, there is also a risk that instability in the east could infect everyone else and drag down the euro. Last week, Moody's Investor Services, a credit-rating agency, warned of default risks for banks in six western European states that are overextended in the east. If that occurs, it could jeopardize one of the E.U.'s finest achievements, the embrace and revival of Eastern Europe...
...shopping spree serves China's purposes, too, helping to head off possible retaliation from Western countries against the huge trade surpluses maintained by Beijing. An unnamed European diplomat in Beijing told the Financial Times on Wednesday that China's "biggest nightmare" is being ordered by the U.S. and Europe to raise the value of their currency by 30% or face a 30% rise in tariffs. The pressure to revalue the Chinese currency could come as early as April 2, when the Group of 20 richest countries in the world meet in London, and where President Obama is scheduled to meet...