The EU has seemingly had too many “rescue packages” to count, but October’s was different from the rest, containing as its centerpiece a pledge to unify all Eurozone banks under a common supervisory entity. A centralized banking system would allow Europe to recapitalize banks with EU bailout funds and make it more difficult for individual countries to veto ECB plans. At the time, European leaders pledged to produce a plan by January 1, but as the FT reports, that deadline is looking increasingly unrealistic, as disagreements about the details threaten to postpone the union:
Germany’s powerful finance minister dug in his heels yesterday against a quick move towards a eurozone banking union, raising fundamental concerns that cast doubts on the EU meeting a self-imposed year-end deadline for agreement.
The objections from Wolfgang Schäuble come just a week before a critical summit of EU leaders and raise the prospect of a significant delay to establishing a single eurozone banking supervisor, a reform billed as critical to rebuilding confidence in the bloc’s shaky financial sector.
The stance appeared to alarm some of Mr Schäuble’s counterparts at a gathering in Brussels, who warned that markets could be spooked by any sign the EU was backing away from consolidating banking oversight, just five months after agreeing to pursue it.
Schäuble’s demands include a separation of the European Central Banks’ banking and monetary roles, as well as an exemption for small banks from ECB regulatory control. England and Sweden have voiced their own concerns, further slowing down agreement on a plan.
The EU has been haunted by strategic disagreements and weak governing institutions that can’t force quarreling nations to agree since the crisis began three years ago. The member countries are too far apart from each other on too many issues to reach consensus on even the most basic relief packages without weeks and sometimes months of posturing, grandstanding, bluff and horsetreading; fundamental reforms to core institutions seem out of the question. Now, even some deals they have already made are being blown apart. Public opinion across the EU is watching this clown congress and wondering whether the answer to Europe’s problems is really to give more power to the people who have made such a colossal mess. As skepticism rises, it’s not as clear as we would like whether and in what form one of humanity’s noblest political experiments can survive its own dysfunction.
In our more optimistic moments, we like to think that the dysfunction and squabbling is a sign of how settled Europe is; American politics certainly have their share of grandstanding and stupidity, but so far the federal union sails on. But the US has a deeper sense of identity, a deeper sense of commitment to a common project, than do the peoples of the EU to theirs, and our Constitution is for all its quirks almost infinitely preferable to the morass of treaties, laws and agreements in which poor Brussels writhes.
Still, the United States has nothing to gain and much to lose from Europe’s deepening impasse. We wish them well and hope for the best.