As the Eurozone crisis persists, the European Union is exploring dramatic options to stabilize the economic crisis which threatens to irrevocably fragment it. An article in the Economist documents the ‘continued need for wavering private banks to be bailed out by their national governments. A proposed measure to mollify the banking emergency is a ‘banking union,’ which would inject failing banks with capital, alleviating the burden of weaker member states. On September 12, the European Commission put forth a proposal for a ‘Single Supervisor Mechanism’- a preliminary step towards this hypothetical banking union. Under this Mechanism, the European Central Bank would supervise all banks within the banking union, allowing it to uniformly apply a single set of rules across the European Union market.
However, this proposed Single Supervisor Mechanism magnifies the tension between preserving national autonomy and the stated principle of solidarity at the core of the EU. The economic disaster has brought to the forefront the opposition of economically sturdy and powerful member states such as Germany to be held accountable for delinquent states such as Greece and France. In the instant case, as described by the Guardian, the news of such a EU banking union has furthered mutual distrust between Germany and France. Germany has essentially accused France of attempting to shift its own perceived financial irresponsibility to the EU, whereas France views Germany’s hesitance towards the proposed banking union as proof that it seeks to retain undue influence apart from the Union. Essentially, Germany wants to maintain control over the majority of its banks.
This dynamic highlights a power struggle between member states (mainly Germany) and the EU governing apparatus. As noted by the Economist, important questions remain, especially regarding the scope of the European Central Bank and whether it will have the power to probe any bank, or to issue or revoke banking licenses. Such questions understandably concern Germany, which does not want to see its domestic influence dissipate because of weaker member states such as France.
As economic uncertainty reigns, the fault lines of the European Union may continue to be exposed further. Germany’s potentially hostile reaction to having its own authority weakened by struggling member states may undermine the delicate balance between sovereignty and solidarity on which the EU is dependent.

« »