So far, the European Union’s response to the world financial rule crisis has followed my first rule of EU politics. In a crisis, European unity quickly shatters. It happened over Iraq; it happened over the Balkans – and now it’s happening over the banks.
The Irish were the first to jump the gun, with their blanket guarantee for national banks. But the German reaction was more surprising. Normally, the Germans are the first to lecture others about the need to put Europe first. Yet here was the Merkel government – apparently making bold unilateral guarantees to German savers - just hours after a European summit had broken up. The fact that the moves were subsequently qualified (or withdrawn?) only accentuates the impression of panic.
There are lots of reasons why EU countries start behaving like this when the going gets tough. First, in a crisis people tend to get selfish. It is easy to be high-minded, when nothing very serious is at stake. Second, EU countries often have very different instinctive reactions, whether it is to the US or to international finance – and, in a crisis, people tend to fall back on gut instincts. But the whole episode poses big long-term questions, which I would like to canvass opinion on – since I may write my column about this next week. Read more