EU leader says U.S. plan will debilitate all markets

The president of the European Union Wednesday lambasted President Obama's costly economic recovery program as "the way to hell."

Czech Prime Minister Mirek Topolánek, whose country holds the rotating EU presidency, criticized the $787 billion U.S. stimulus program in unusually sharp comments that highlighted a continuing divide between Europe and the U.S. on crisis-fighting steps. Topolánek said the U.S. was repeating mistakes it made during the Great Depression when it ramped up government spending, and said Washington's errors would boomerang on Europe.

"Americans will need liquidity to finance all their measures, and they will balance this with the sale of their bonds. But this will undermine the liquidity of the global financial market," Topolánek said.

The Czech leader's blast at the U.S. recovery plan may stand as the highlight of his brief tenure, however, as his center-right coalition government Tuesday lost a vote of no confidence. Topolánek says he will resign today.

The trans-Atlantic dispute comes a week before President Obama makes his first European diplomatic foray, beginning with an April 2 global financial summit in London.

The summit, featuring leaders of the Group of 20 nations, comes as the world economy continues to deteriorate. In the fourth quarter, global output fell by an "unprecedented" 5% and will shrink in 2009 on an annual basis for the first time in 60 years, says the International Monetary Fund.

European leaders have resisted U.S. calls for more government pump-priming, fearing the effects of swollen budget deficits. The IMF says the collective stimulus measures being enacted by G20 nations "fall well short of the 2% of GDP recommended by the Fund, especially in 2010."

Dan Price, who coordinated global economic issues for the Bush White House, said the U.S. and Europe are closer than the Wednesday flare-up suggests. "There is a great deal of consensus," said Price, a partner at law firm Sidley Austin.

The summit's British hosts also minimize the gap between the U.S. and European positions.

"I don't think there is any fundamental disagreement at all. ... I don't think there's a sort of philosophical or policy divergence," British Ambassador to the U.S. Nigel Sheinwald told reporters earlier this week.

Summit attendees are expected to discuss a range of crisis measures, including boosting the IMF's reserves, new financing to restart failing trade flows, and tighter regulation of large cross-border financial institutions.

Contributing: The Associated Press