European Union in crisis

German firms have gained an advantage with government measures to reduce non-wage labour costs. An applause-grabbing remark to a Labour Party conference about “British jobs for British workers” has come back to haunt Brown as workers protesting foreign labour brandish placards with his words. Banks in Britain helped by the government are told to lend to the domestic market, not to foreigners. Questioned about this, Chancellor of the Exchequer Alistair Darling responded that taxpayers expect this and that other governments should do the same.

Aid packages for French and German banks go against the spirit of EU competition policy. Despite summit meetings and expressions of good will in seeking joint solutions, the actions of major EU countries make it clear that priorities are overwhelmingly domestic, whatever the repercussions for weaker neighbours and, longer term, for themselves.

The French leader has long chafed under the budget limits set by the European Central Bank, and governments in countries hard hit by the crisis are likely to agitate for relaxation of rules, even if this brings them into conflict with the Germans. “In a time of economic crisis, we see atavistic instincts emerging,” Czech Foreign Minister Karel Schwarzenberg told the New York Times in mid-February. His country’s Prime Minister, Mirek Topolanek, warned against “beggar-thy-neighbour” policies among the 27 member states and called a EU summit before the end of this month to co-ordinate policies.

This was meant to be the year when the EU marched on to a new stage in its development, with president of the European Council serving 30 months rather than the present six-month rotation and a newly anointed diplomatic chief giving the community more global clout. Whether that happens is a matter of crystal-ball gazing. All that’s evident is the economic crisis risks tearing holes in Europe’s fabric woven over the last 50 years.

A government should be capable of looking beyond immediate challenges to cooperating in finding solutions. That, one might naively think, is the purpose of an association like the EU. Yet there’s little sign of such action so far. Despite Steinbrück's warning, Europe is not about to revert to the 1930s. But in the conflict between the Union’s broad communitarian ambitions and immediate imperatives bearing down on politicians, it’s clear which is winning, with potentially damaging long-term consequences.