By Mark John
BRUSSELS, March 19 (Reuters) - European Union leaders will agree on Thursday to push for the International Monetary Fund to have more firepower to fight the global slowdown, but resist calls to inject new cash into their own economies.
The two-day Brussels summit is aimed at fine-tuning the European stance for a G20 meeting two weeks later where the world will expect major powers to get to grips with an economic crisis that has strained rich and poor states alike.
Anxious to maintain the budgetary rigour underpinning the euro currency zone, continental European capitals have shrugged off U.S. calls for more fiscal stimulus and put faith in their generous welfare states to ride out the worst of the storm.
While more sympathetic to the U.S. position, even Britain will go to the EU headquarters stressing the need for tighter financial supervision -- a tone echoed by France, Germany and others who insist the credit crunch was "Made in the USA".
A likely outcome is a joint call by EU leaders for a doubling of IMF funds to $500 billion, a pledge for a European contribution of up to $100 billion, and a demand for IMF reform designed to bring countries such as China more on board.
"I am very optimistic that heads of state will (call to) increase the amount," said the Czech ambassador to the EU Milena Vicenova, whose country holds the rotating presidency of the 27-nation bloc and will chair the summit.
Summit drafts obtained by Reuters earlier this week showed that leaders would show ready to bail out troubled EU nations -- notably the poorer ex-communist newcomers -- on a case-by-case basis, and would look at topping up a 25-billion-euro emergency fund already used to help Hungary and Latvia.
MUTUAL SUSPICIONS
The drafts studiously omit reference to new fiscal stimulus, insisting the onus should be on implementing existing recovery schemes based on everything from tax cuts to infrastructure spending, and allowing welfare payments to kick in.
"We are doing more than anyone in the world on that matter," European Commission chief Jose Manuel Barroso said on the eve of the summit, referring to efforts to cushion the impact of the recession on citizens.
"Others should increase their effort in that way as well -- that would be a good contribution for the global recovery," he said in reference to the U.S. and Asian economies.
The EU puts the total size of its effort to combat recession at anything between 3.3 and 4 percent of its output, including welfare spending -- still short of President Barack Obama's plan to devote 5.5 percent of U.S. output to recovery efforts.
The EU unity on stimulus policy masks tensions that could yet bubble over at the summit, among them mutual suspicions over efforts to prop up national industrial champions at the expense of foreign rivals -- as witnessed by the widespread concern last month at French moves to support its carmakers.
A spokesman for British Prime Minister Gordon Brown said he would call for tighter supervision of hedge funds, derivatives and executive pay -- all subjects unlikely to ruffle feathers before the G20 talks he will host in London on April 2. (Additional reporting by Frank Prenesti in London; Editing by Dominic Evans)