Czech PM: Crisis Impact Due To Policies, Not Place

Topolanek said the Hungarian proposal for a mass bailout had failed to win backing.

The way the financial crisis has affected individual EU member states is the result of their policies rather than their location in the east or west of the continent, Czech Prime Minister Mirek Topolanek said on Monday.

The Czech Republic and other wealthier members of the bloc have been lobbying to be treated on a case by case basis during the crisis, hoping to avoid contagion from worse-affected countries like Latvia or Hungary.

On Sunday, EU leaders rejected Hungarian calls for a 180 billion euro ($227 billion) aid package for central and eastern Europe, saying countries would be helped on an individual basis because some were more vulnerable than others.

The absence of a single big plan for the 27-member bloc disappointed regional financial markets on Monday, and emerging European currencies dropped, led by the Hungarian forint.

Topolanek said the Hungarian proposal for a mass bailout had failed to win backing and called for each country to be assessed on its own merits.

"The Iron Curtain is no longer an imaginary dividing line" marking different economic policies, progress in structural reforms or implementation of the internal market, he told a conference marking the fifth anniversary of the European Union's enlargement to take in 10 new members, mainly ex-Soviet bloc.

"Among both old and new member countries, there are states that -- as the result of well or poorly set domestic policy, and completion of reforms or lack of them -- are now handling the crisis relatively well or ... are facing serious problems."

Most analysts agree that new EU members that have run large current account deficits and borrowed heavily abroad to finance fast economic growth, like countries in the Baltics and the Balkans, took the biggest risks.

Most of them are now dealing with a collapse of confidence and capital flight, and their banking sectors are struggling to shore up their lending and at worst prevent financial crises.

Hungary has already received a bailout package from the IMF and the EU, as has Latvia, which has also seen violent protests and the fall of its government.

Western European countries have also been hit, Ireland suffering a sharp drop in gross domestic product last year and unemployment rocketing in Spain due in part to the collapse of its once booming construction and real estate sectors.

Britain is expected to post a huge budget deficit in the current year because of its bailouts of the banking sector, and some west European states face the prospect of bigger falls in GDP than some in the east.

Topolanek said the European Union's main goal should be to continue liberalising its internal market, mainly in services and the free movement of labour, to secure its long-term economic success.