25 June 2013

WSJ: EU's eroding support imperils crisis response

As European Union leaders head to a summit meeting, they face a crisis that could be even harder to fix than the region's debt problems: Europeans are losing trust in the EU itself and the benefits of unifying the region.

 

The long economic slump in much of Europe is breeding animosity towards EU institutions, visible in opinion polls and in national politicians' growing tendency to blame the EU for high joblessness and budget strains. That animosity makes curing the economic malaise—and overcoming the design flaws in the euro—more difficult.

EU officials and many analysts say the medicine must include centralising more policy-making in Brussels. But European voters appear less and less open to that, creating political tensions that are breaking into the open. Top French officials have attacked the European Commission, the EU's Brussels-based executive, for telling countries how to run their economy. German Chancellor Angela Merkel, facing elections in September, has backed away from bold ideas for deeper European integration.

No country that has the euro wants to leave it, according to opinion polls, and only in Britain is there strong political or public support for leaving the EU. But across the continent, the EU's low public standing is depleting support for strengthening its institutions.

Relative calm in European financial markets, compared with the government-bond panics of 2010-2012, has removed the sense of urgency that drove EU leaders to promise a "banking union" at a summit one year ago. The core idea then: Europe would use its collective financial muscle to recapitalise stricken banks, so that banking crises wouldn't wreck the finances of indebted national governments. Yet the same governments that promised urgent action in June 2012 have only just agreed to a modest step in that direction—earmarking up to €60 billion ($78 billion) of bailout-fund money for ailing banks. And that will only come into force late next year.

European leaders also promised last year to work out a plan for turning the fragile euro into a "genuine economic and monetary union", with much closer coordination of budget and other economic policies.

Full article

© Wall Street Journal