Analysis: Europe must march to same tune

BRUSSELS, Belgium (CNN) -- This time they really do need to march in step. The first time a clutch of EU leaders got together as the world slipped into economic meltdown there was no unity. Soon the world was asking if an EU with 15 members inside the Eurozone and the other dozen using their own currencies was even capable of making a useful contribution.

Typical was the reaction of Germany's Finance Minister Peer Steinbruck to the idea of a common European bailout fund: "The Chancellor [Angela Merkel] and I reject a European shield because we as Germans do not want to pay into a big pot where we do not have control and do not know where German money might be used." .

Last weekend was different. Gordon Brown's initiative in Britain, injecting liquidity into the system, strengthening the banks' capitalization by part nationalization and freeing up the paralyzed lending process by guaranteeing inter-bank loans was taken up by others. Suddenly Nicholas Sarkozy, current holder of the six-month EU presidency, was able to boast that Europe had pledged more than the USA to aid the banking crisis.

But Mr Sarkozy added that when all 27 EU members got together as they are now doing : "We need concrete measures and we need unity."

A global crisis needs a global response. To restore confidence in financial institutions, to stop a recession turning into a depression with the incalculable misery of lost jobs, homes and pensions for millions it really does matter that every signature goes on the bottom of the page. Watch more on the markets »

We are at a moment in Europe's political history just as testing for the EU as the fall of the Berlin Wall or the arrival of terrorism in the United States in September 2001. Ursula Plattnik, the Austrian Foreign Minister declared : "Over the past few days we've developed a common European consciousness in the financial crisis that we will translate into action." And millions will hope that she is right. Watch European Central Bank chief discuss the crisis »

If the EU is to remain an important factor in world politics the 27 have to act together now. The sums involved are vast. They will mean precious projects in other areas being postponed or abandoned. And with many in their populations questioning whether throwing vast bundles of taxpayers' money into correcting the mistakes made by bonus-stuffed bankers the 27 EU leaders, make no mistake, are gambling with their political futures.

Their first requirement then at this summit is an effective display of unity. The second is to codify and coordinate the actions being taken by the individual EU nations in terms of guaranteeing savers' nest-eggs, demolishing the casino economics and bonus culture which had engulfed the banking world and ending the paralysis of lending which is threatening to strangle the business world.

In effect the EU needs to develop a common rulebook on bailing out banking sectors and kickstarting lending. It needs to determine not only the level of deposits which are to be safeguarded in any savings institution which bites the dust but to make clear whether these are vague political promises or firm legal guarantees.

It needs to discuss whether there should or could be EU-wide rules on bonuses and bankers' pay. It needs to agree any sensible relaxations in the rules of the European Central Bank which could make it a more effective player in the crisis. It needs, in short, to put meat on the bones. Read timeline of the crisis

But there will be other concerns at this summit too. Some economic institutions worry that newer EU arrivals from the former communist world, like the Baltic countries Latvia, Lithuania and Estonia, have pursued similar borrowing practices to those which have brought Iceland to its current crisis. The EU needs to take a close look at their positions and have its plans ready, just in case.

And what about Iceland itself? The world is not just about economics but politics too. Iceland, a member of NATO and a country deeply involved in the Arctic search for energy resources, has been seeking a hefty loan from Russia. How comfortable can the EU members, even those which are not members of NATO too, feel about that and what are they going to do about it?

Then too there is the question of the EU's brave plans to tackle climate change. Remember the so-called 20-20-20 formula, reducing the 27 nations carbon emissions by 20 per cent from their 1990 levels by 2020, and meeting 20 per cent of their energy needs by then from renewables. That was going to be tough anyway for countries like Poland, heavily dependent on its abundant coal supplies. Now a cluster of at least six countries, including Poland, is calling for a watering down of the climate change targets.

Jose Manuel Barroso, the Commission President, and Gordon Brown, Britain's Prime minister, have opened their summit contributions by insisting that the EU must not stray from its commitments in this area. But the battle has only just begun, with others saying that they cannot afford to battle climate change AND bail out their banks. Watch more on Brown's political recovery »

This is a summit with real meat on the agenda. And with the eyes of the world on Europe.

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