Press

"I think we are seeing the beginning of a euro group which could become a more important organisation politically as well as economically," said Charles Grant, director of the Centre for European Reform. "France has long wanted the eurozone to be on a basis that made it more important and the Germans have now accepted that logic."

"The adjustments facing Greece, Ireland or Portugal were always a tall order," argued Simon Tilford, chief economist of the Centre for European Reform, in an analysis of the euro's woes. "Now that borrowing costs have ballooned, those adjustments are impossible. Under no plausible economic growth forecasts will these economies be able to pay back their debts."

Germany has a critical role to play if the EU – either as a bloc or as a looser collection of states – is to play a bigger security role in the world. "In defence capability, there is a huge gap between the French and British on the one hand and the rest of the EU on the other," says Tomas Valasek of the Centre for European Reform. "The only country sitting in that gap is Germany." If it moves closer to France and Britain in terms of deployability, that makes "a big difference" to European capabilities.

For the first time, says Charles Grant of the Centre for European Reform in London, the EU has a single nation in the driving seat: Germany. Paris has taken a back seat following years of Franco-German leadership. Also, the European Commission, the EU's Brussels-based executive arm, has been weakened. That has imposed German thinking on the eurozone, Mr Grant says.

"Decisions on whether the economies of Greece, Ireland, Portugal, and Spain survive or collapse — indeed, decisions about the future of the euro itself — are made in Berlin more than ever", says Charles Grant, director of the London-based Centre for European Reform (CER). "Everything depends on Germany now Europe is dancing to Germany's tune. Germany has the largest and strongest economy, the deepest pockets, and the most solid AAA credit rating of any major European economy. Even Europe's No. 2, France, is judged by bond markets to be a potential problem.

Still, some world leaders and analysts have questioned whether Sarkozy's war against the dollar should be a priority. "It suggests that the US policy has enabled the United States to pursue policies that were destabilising to the EU economies, and so this would impose discipline on the Americans", said Simon Tilford, chief economist at the Centre for European Reform. "It's misleading about the underlying causes for the crisis. It's hard to see how this will have a major impact on helping solve problems."

Charles Grant, head of the Centre for European Reform and author of a book on EU-China relations, said China's top goal is to secure an end to the EU arms embargo, imposed after the Tiananmen Square massacre in 1989. It rankles as humiliating treatment for a global superpower that has since changed profoundly. Mr Grant said Britain, France and Germany are all wary of giving ground, cleaving closely to US policy. Washington views China's growing military might as a strategic threat to the Pacific region.

"Greece is the perfect example of what happens when you let a country in without it being fully prepared", Hugo Brady from the London-based Centre for European Reform told this website. Romania and Bulgaria were admitted in the EU too early, he said, with member states now wanting to make sure the same mistake is not repeated with the Schengen zone, especially since both countries are on key migration routes from Turkey and Ukraine.

Hugo Brady, senior research fellow at the Centre European Reform, said the commission needed to change its rules to allow Lady Ashton to send a deputy to meetings. "If it doesn't work it will reflect badly on the commission as well", he said.