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Unity in Crisis
October 6, 2008
It is only human to search for a ray of light in the European Union’s ever-darkening financial landscape. Could it take the form of an unexpected boost to the cause of EU political and economic integration?
One such optimist, a genial and perceptive diplomat who has immersed himself in EU affairs for the past 30 years, suggested to me the other day that it often takes a crisis to inject real momentum into what he and others in Brussels like to call “the European project”. For example, the 1992 crisis in the European exchange mechanism appeared to deal a serious blow to the goal of creating a single European currency. But the reaction was spirited. Only seven years later, the euro was up and running.
Similarly, it took the 9/11 terrorist attacks on New York and Washington in September 2001 to prompt EU leaders into agreeing, at a summit just three months later, on the principle of a European arrest warrant. This allows the swift transfer of criminal suspects for trial and detention from one EU member-state to another. It proved effective in securing the extradition from Italy to the UK of Hussain Osman, an Ethiopian-born Briton accused of involvement in a plot to attack London’s transport system in July 2005.
On the face of things, the financial crisis offers a perfect opportunity to push forward closer European integration. If a big cross-border European financial institution fell into trouble , it would be ludicrous to argue that it was purely a matter for the government of the country where the institution has its headquarters. Tommaso Padoa-Schioppa, the former Italian finance minister and European Central Bank executive board member, thinks the financial crisis merely reinforces the case for a powerful pan-European regulator that he used to make in front of his EU colleagues.
However, the response of governments so far indicates that they are not ready - yet - for a Great Leap Forward in terms of closer integration. This was well illustrated last week by the curious tale of the French plan for European bank bail-out fund, which turned out, after a feverish 24-hour news cycle, not to be a French plan for a European bank bail-out after all.
Only the Dutch authorities were brave enough to state publicly that, yes, they thought such a plan would be a pretty good idea. But given the opposition of the UK and , more importantly, Germany - still the EU’s paymaster and the country that would surely bear the brunt of the cost of such a fund - the plan was dead before it started.
Of course, European integration can come in many shapes and sizes and an EU bank bail-out fund doesn’t have to be one of them. But solidarity among all 27 EU member-states is a a fundamental principle. Without it, the EU is nothing. If a large bank fails in an EU country that does not have the resources to rescue it, it will not be long before that principle is put to the test.
A difficult operation performed by 27 doctors speaking 20 different languages.I dare to say that i would’n like to lay over that bed.Nor will the European Banks,i am afraid.
Posted by: stafano de santis | October 6th, 2008 at 2:47 pm | Report this commentIt is when the life conditions become turbulent(as it is starting to show now) that they are a signal that the actual system has found its limits and that brings the opportunity for fresh and new solutions that solve the problems of the old system through the vision of a new system;the next step, I think it is obvious, is the political integration to lead the way of Europe for the years to come; but I think we are in the razor’s edge, and both ways are likely to happen: back or forward. There are many presidents of states, banks and business but not real leaders with an authentic vision.
Posted by: Angel Melgar | October 6th, 2008 at 3:26 pm | Report this commentThe problem is not co-ordination between the 27 members of the EU the main problem is no co-ordination between the Eurozone members. A division of labour must be stated, in this financial crisis. The eurozone countries must work together to ensure confidence and preserve wealth. The crisis also highlights the need for a two speed Europe - those outside the eurozone must fend for themselves.
Posted by: KWM | October 6th, 2008 at 9:24 pm | Report this commentI am not sure why it is necessary for a 27 EU co-ordinated solution. What is necessaet is a EUROZONE co-ordinated approach - forget the 27 and concentrate on the 12/13
Posted by: PF | October 7th, 2008 at 1:51 pm | Report this commentThe EU is always a solution looking for a problem. The true problem in Europe, that will remain long after this financial crisis, is the ever swelling body of superior EU law imposed on electorates by QMV. This growing body of undemocratic law is steadily shutting down the legislative power of the democratic political institutions of the nation-state and diminishing the power of our votes to shape the governance we live under. The solution to this problem will not be ‘more Europe’ but rather renegotiation of the UK-EU relationship.
Posted by: Freeborn John | October 8th, 2008 at 11:13 am | Report this commentFirst let’s stay calm…2nd get only securities and preferred stock in every loan to banks and other investment firms as well as Board seats and re-setting mortgages at lower rates , 3rd re-organize “credit -default-swaps” for a major value re-set ( from 60 trillion dollars worldwide to 10 or less or in other words from unreal phony casino chips into real smaller assets ), 4th make the brokers , traders ,bankers, lawyers ,executives , Board members and others that profitted from them to pay the bail-out costs plus interests, 5th stay calmer…and above all get the EU and the USA full speed ahead into solar, wind , geothermal , electric-hybrid ,new batteries ,hydrogen, synthetic jet-fuel and bio-fuels energy because at the end of the day it’s still our ” imported energy dependency” what creates the imbalance ( see the AMD deal with Abu-Dhabi’s money and with our imported oil and gas payments ) , so will the politicians apologize for their ignorance and correct course today ? or will they drive all “off-the-cliff” with billions of dollars and euros for imported oil and gas day after day again ?
the past trick of selling mortgages and reposessing the property, selling it again and reposessing it again, and then re-packaging these bad deals into derivatives and swaps may be over (?) , but as we saw this week with Fuld of Lehman and the darlings in AIG on the USA Congress-House Hearings, they get to keep their hundreds of millions of dollars in salaries and stocks while the taxpayers get …..more of the same.
To the Politicians , as they say : it’s Energy Independence , you fools!
Posted by: financialtools1@gmail.com | October 8th, 2008 at 7:49 pm | Report this commentWhat a piece of junk the “Analysis: EU summit marks pivotal point” article is. Nothing but a federalist’s wet dream dressed up as journalism and the type of junk jounalism that makes me refuse to buy the FT.
Posted by: Ex FT reader | October 14th, 2008 at 6:29 pm | Report this commentThe European Union is still holding to the Euro but the French presidency call for unity of action remained ineffective. The EU Commission adds its worry: Joaquin Almunia, the European Union’s monetary affairs commissioner, said EU governments must work together to prevent protectionism and economic nationalism from turning the downturn into a more profound problem. The French presidency failed attempt to reinforce the presidency of the Eurozone, de facto bypassing the conundrum of the 27-states shared responsibility in the EU/Ecofin, shows the gravity of the impasse facing Europe. The EU has been so far unable to adopt a single anti crisis plan agreeing only on some coordination of national mechanisms.
European historical nation-states greed for world stage and power is still alive. The current financial crisis has just exacerbated the spirits. It is so that each of the four main European states (France; Germany; Italy; Spain) is mobilizing all its geopolitics connections of influence to show up and gain some visibility beyond the common EU interest. Moreover, the historical ideological divides between traditional left and right politics continues to undermine any attempt to settle unity at least on national or European interest.
The European Union is a process studied and envied by many. Its history tells us that times of crisis have been its best founding moments. We hope so!
Posted by: paolo raffone - The CIPI Foundation | November 14th, 2008 at 1:32 am | Report this comment