The financial crisis could be the euro's death knell

 

and even end the shambolic EU

By Christopher Booker

08/10/08 "Daily Mail' -- At the very moment when Europe's banking system is teetering on the edge of collapse and national economies are in freefall, we might, perhaps, have expected the EU finally to live up to its more grandiose pretensions as the ' government of Europe'.

Yet what have we seen by way of the EU's response to what is undoubtedly the most testing crisis in its history?

A few perfunctory fine words and empty gestures - and then the national leaders flapping off like so many headless chickens to pursue their own national interests, regardless of all those laws and principles which in easier times they were apparently so happy to sign up to.

The truth is that this massive banking crisis has exposed the hollowness, the impotence and the hypocrisy of the European Union like nothing before in its history.

This present emergency is the first real ordeal that the euro - that supposed symbol of European economic unity - has had to face as a major international currency.

Yet, without a central united government to give it proper political clout, it has seemed strangely irrelevant to a financial meltdown that has seen all the 13 countries which use it more concerned about their own national economies than a supranational currency.

The fact is that when a crisis occurs, we are all concerned about our own nation - not our neighbours.

But what is doubly worrying about the EU in the current crisis is not just the questions it raises over the single currency, but the spectacular inability of the whole creaking edifice to respond in any meaningful way.

First, last week, we saw Nicolas Sarkozy of France, as the EU's acting president, calling for an EU-sponsored bail-out of its banks, in pale emulation of the attempted bail-out of the U.S. banking system which was dominating the world's headlines - an empty political gesture which melted away almost as soon as he had proposed it.

Then we saw the Irish government, faced with the imminent collapse of its own major banks, pledging a 100 per cent state-backed guarantee of all customers' deposits.

This was in flagrant breach of EU law, but it just happened that the Brussels commissioner in charge of financial services was Charlie McCreevy, an Irishman who cheerfully observed that he could see no problems with his country's scheme.

On Saturday, President Sarkozy invited Chancellor Angela Merkel of Germany, Prime Minister Silvio Berlusconi of Italy and Gordon Brown to Paris for an 'emergency summit' to discuss the crisis.

'It is of the essence,' said Mr Sarkozy, 'that Europe should exist and respond with one voice.'

This, in itself, was odd enough. Why were only these four governments represented - along with the president of the European Central Bank, the man in charge of the euro?

What about the leaders of the other 23 countries making up the EU, many of whom were deeply disturbed at being excluded from this cosy get-together?

It was far from clear that anything emerged from Mr Sarkozy's summit other than their alarm at the precedent set by the Irish government in guaranteeing those bank deposits, which had already led to a drain of billions of pounds into Irish banks from countries which did not offer their customers such protection.

And what happened next, when Chancellor Merkel scurried back to Berlin to find the German banking system on the edge of its own meltdown?