BERLIN – Returning to Europe lately after a six-day trip to the United States, I wondered for the first time while reading the press on the recent Irish crisis whether the euro – and thus the European Union – might possibly fail. This could happen because, in the long run, the EU won’t be able to withstand its conflicts of interest and the resulting process of “renationalization” in all member states without suffering grave damage.
At the height of the Irish crisis – mainly a crisis of confidence in banks’ stability and the strength and competence of Europe’s political leadership – European leaders were publicly at each other’s throats. While their stated aim was to save the euro, the government leaders involved did exactly the opposite, producing increased nervousness and volatility in financial markets, which in turn exacerbated Ireland’s problems.
Germany made its own contribution to aggravating the crisis by launching a public debate about involving the banks in shouldering losses from 2013 on. Why this discussion had to take place now, in the middle of the Irish crisis, remains Chancellor Angela Merkel’s secret. It was most likely prompted solely by domestic political considerations. Indeed, the demand for bank participation is popular in Germany – and justifiably so – unlike the Irish rescue package. But it would be more productive to implement such a policy than to announce it two years in advance.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
Already have an account or want to create one? Log in