But the 27-nation bloc based at Rue de la Loi in Brussels, Belgium, hasn't taken sweeping joint action to deal with the global financial meltdown.

Though the EU agreed on Tuesday to boost guarantees on deposits, it hasn't set up any kind of central response mechanism to protect banks and depositors.

Instead, it's essentially left member countries to go it alone with a patchwork of measures aimed at keeping banks afloat.

Frustrated investors want to know why, and some have begun to question whether the EU - at its core, an economic union - will survive.

'Europe is in the midst of a once-in-a-lifetime crisis,' 256 of the continent's leading economists said on Tuesday in an open letter to EU leaders.

'Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath,' the economists said.

They evoked 'the dark years of the 1930s,' adding: 'It is not an exaggeration to say that it could happen again if governments fail to act.'

And failure has been an EU hallmark over the past few years. A campaign to get all 27 nations to ratify a European constitution designed to streamline decision-making and give the expanding bloc more of a voice in world affairs remains stuck in limbo.

Irish voters rejected it in June, three years after resounding 'no!' votes in France and the Netherlands crippled the EU's ambitions of becoming a superstate.

Many who backed a greater global role for the EU have consoled themselves by focusing on its roots as an economic union.

Today's EU sprang from the six-nation European Economic Community established in 1957.

But the bloc designed to unite is riven by all kinds of divisions.

EU members have clashed repeatedly on deploying troops to Afghanistan or even to send 24 of their estimated 12,000 military helicopters to Darfur.

They've bogged down completely on more thorny issues, such as how to respond to terrorism or recognise an independent Kosovo.

That makes the credit crisis now rattling markets and consumers worldwide even more of a test.

If the EU can't forge a common response to a collapse that transcends borders, involves multinational lenders and has pushed the euro currency down to its lowest level in a year, some wonder: What's the point of having an EU?

EU leaders have forfeited 'a chance for Europe to find new leadership and credibility on the world stage,' Italy's Il Sole 24 Ore financial daily said in an analysis on Tuesday.

Instead, it warned, the leadership vacuum thrusts the entire bloc into 'a suicidal position'.

As calls mounted for a unified plan of action, EU finance ministers held an emergency meeting on Tuesday in Luxembourg to debate raising guarantees for private savings across the bloc.

They agreed to raise the minimum bank deposit guarantee to 50,000 euros (S$100,000) - but that's just half of the 100,000 euros backing that France wanted. Private deposits in most of the EU have been insured only up to 20,000 euros.

Britain, France, Germany and Italy announced last weekend that EU nations would act together to calm roiled markets.

Yet in practice, European governments have taken an a la carte approach: Germany pledged to guarantee all private bank savings and CDs in the country, and Iceland and Denmark followed suit. Ireland went even further by also guaranteeing Irish banks' debts.

'Things are starting to get complicated in Europe because the national interests of 27 countries are getting in the way of the common good,' Portugal's Diario de Noticias newspaper said in a commentary on Tuesday.

That, the daily Publico said, boils down to this: 'Each country will have to look out for itself and sort out its own problems.'

It was easier for the EU to take common positions when it wasn't so big. Today's bloc is unwieldy, and it includes eight ex-communist countries that don't always take kindly to the notion of government intervention.

'The politicians in Europe are crazy. We didn't live under communism for 40 years just to return to it on EU soil,' said Czech Finance Minister Miroslav Kalousek, who opposes 100 per cent guarantees on bank deposits as unaffordable.

His Spanish counterpart, Pedro Solbes, contends it's dangerous to go it alone. In a shared business climate, he believes, 'decisions should be taken in agreement and not individually.'

El Pais, Spain's leading newspaper, agreed. In an editorial on Tuesday that warned of chaotic consequences, it cautioned: 'There is a real risk that a great quantity of money will flow from those countries with fewer guarantees to those whose deposits are backed up absolutely.'

Italian Premier Silvio Berlusconi has been pitching the idea of an 'umbrella' fund for the common market.

But German Chancellor Angela Merkel has ruled out a US-style, EU-wide bailout of troubled banks.

Dr Merkel's spokesman, Thomas Steg, told reporters on Tuesday that although EU coordination is important, Germany believes 'each must endeavor to solve the problems with the means and methods available to him.'

'It's very painful that Europe is now divided,' said Mr Willem Vermeend, a former Dutch junior minister for finance.

'It's important that you have a central authority that can act very quickly', Mr Vermeend said. 'But I understand very well that countries say, 'We're going to take measures ourselves now.' If it doesn't come from Europe, you can't wait for Europe.'

'If you have to break a few eggs, too bad, but there's a higher purpose,' he added. 'We need to save the economy. Period.' -- AP