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Europe clashes over how to tackle financial crisis

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Europe clashes over how to tackle financial crisis


Europe’s handling of the global financial crisis continues to divide the bloc ahead of an emergency summit on Saturday.

France has denied it was behind plans to create a 300-billion euro bail-out fund to help banks in trouble.

On a visit to Paris, Dutch prime minister Jan Peter Balkenende said the Netherlands favours national rather than pan-European funds but insisted on the need for dialogue between EU members:

“The important thing is that we try to find a common coordination, a common strategy based on national responsibilities and, of course, the situation is not the same in all countries. Some have less problems than others but the important thing is that we are working together.”

In Ireland, an emergency plan passed on Thursday guaranteeing the deposits and debts of six Irish-owned banks for the next two years angered many in neighbouring Britain who say it is anti-competitive. The move has also raised questions in Brussels about state-aid rules.

According to political analyst Daniel Gros, isolationism is not a solution: “It’s clear that in every national capital people think: ‘Our banking system is safe, we don’t want to pay for the others.’ As long as most people and most finance ministers think that, they will not agree in a European aproach. What they don’t see is that everybody can have problems, and quite quickly, because if one large bank fails in one country – even if it’s not in its own country – problems can spread very quickly indeed.”

On Thursday, Hypo Real Estate Holding became Germany’s first blue-chip company to seek government rescue, with backing from Brussels – which has called for a joint European response to the crisis.

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