Bailing Out

Bailing Out

The European Union celebrated Europe Day in Washington on May 8 by opening embassies to visitors who received free samples of the best the continent’s countries had to offer. The line to get into the German Embassy wound around the block, and we have to imagine that some of the couple of hundred people waiting at the gate may have been attracted by word that Germany was considering handing out bailout funds along with the bratwurst.

In fact, the EU was marking its unity in Washington just as the union itself appears to be spinning apart, at least as far as the ambitious plans go to bring together an integrated common trading market.

That was true at the beginning of April, when the eruption of Iceland’s Eyjafjallajokul volcano shut down airports across the U.K. and the European continent and revealed, through its ash cloud, the fractured system of air traffic control in Europe.

And it was true at the beginning of May, when European leaders cobbled together a rescue package of nearly $1 trillion, with the help of the International Monetary Fund, to keep Greece’s potential default on its crushing debt from halting the world’s fragile economic recovery. The problems in Athens, the domino theory of economics goes, would spread next to Spain and Portugal, and could cause chaos in Brussels.

Greece, in other words, is playing the role of Lehman Brothers in a gathering economic disaster. The question isn’t whether Greece is too big to fail, because Greece is, well, a country, and the images of rioting in some Greek cities were just a hint of what would come in a broader national economic failure.

The concerns for the world of trading and shipping go beyond the streets of Athens, however, and really to the heart of the EU’s tenuous structure.

Since the early 1990s, the EU’s most ardent backers have sought to position the continent as a kind of United States of Europe — a common economic zone with a single Parliament, a single currency and a single face to the trading world. For transportation, the results have been dramatic, with consolidation among national flag airlines and laudable decisions such as the elimination of container carrier conferences — moves that would have seemed unthinkable years ago. Europe-Asia routes are among the world’s busiest container trade lanes.

Within Europe, however, the cultural, political and economic borders are readily evident, belying the idea of a unified Europe as readily as British voters have, and making resolution of the economic crisis so politically painful.

The EU has faced nothing like the debt crisis spreading across the continent now. The potential solution in the high-stakes bailout comes because, it turns out, there is some unity in Europe, although not necessarily the sort of unified resolve and political comity envisioned in Brussels.

Europe is unified in this case because the debt piling up in Greece, Spain, Italy and Portugal is owned to banks in France, Germany and Britain, integrating the economic peril and the fear of the repercussions.

Paul Page is executive director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com. Follow Paul Page on Twitter, www.twitter.com/paulpage.