Comissioner Joaquín Almunia has made a relevant statement recently: that eurozone-member countries, which face big difficulties, could benefit from assistance from other EU members. This statement has to be seen in conjunction with Germany's inclination to consider, eventually, such a démarche. For the danger to the eurozone could increase exponentially if no solidarity mechanism were available.

But I wonder why this sign of collective response is not firmly indicated in the case of non-eurozone New Member States (NMSs). I put aside the lack of solidarity among NMSs themselves, which is a sign, in my view, of the same mindset which was ascribed by some of their top officials to their western counterparts: the temptation to adopt policies in the vein of "sauve qui peut" instead of forging an effective and strong EU policy response to the economic crisis.

Unfortunately, NMSs are left, basically, to their own efforts while the EC and other EU institutions consider their requests via a case by case approach. Even that might not be bad provided the assistance extended is appropriate. But there are already signs that there is something wrong with the analytical underpinnings of the assistance packages adopted in the case of Latvia and Hungary. Reducing very large imbalances is not wrong,fundamentally. But how this is done does matter to the utmost. For instance, external imbalances are likely to diminish, willy-nilly, because capital inflows go down dramatically in NMSs. Consequently, a question arises: are budget deficits to be compressed drastically while the private sector is cutting its activity dramatically? A budget policy that relies on
cutting expenditure brutally and, possibly, on increasing taxes, at a time when the private sector is retrenching its operations would make a downturn worse. Pro-cyclicality has to be averted during a downswing as during an upswing. In addition, if public budgets are
not the main explanation behind large external deficits, why should they bear the brunt of downsizing external deficits? Just remember the lesson from the Asian crisis, a decade ago. It is fair to highlight the forex constraint for NMSs at a time of capital flight, no risk appetite and when short-term obligations are quite big.

Nevertheless, while sensible budget policies are needed (in view of the likely impossibility of issuing sovereign bonds on international capital markets), the IMF and other IFIs backed programs have to consider the extraordinary current situation - and, in particular, the general economic downturn, which does question the suitability of overburdening public budget policy.

Policy also has to think about how to discourage speculative attacks against the currencies of NMSs. Just by cutting budget deficit drastically would not help much in this regard either. If such overburdening of budget policy happens, vicious circles are inescapable, which would make matters worse. And here I have not mentioned the social, and, possibly,political consequences of such a bad dynamic.

It is no accident that Robert Zoellick, the World Bank head, and others have spoken about a new looming divide in the EU. It may be that some of our American friends are better at strategic thinking than many of our European politicians. The European Commission should be more forthcoming in devising a collective approach in assisting the NMSs.

Hopefully, the Ecofin meeting in mid March would bring it. Likewise, whenever the IMF is brought on board in assistance packages it should consider the suitability of its traditional approach in dealing with macroeconomic imbalances in view of the extraordinary current circumstances.