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"The European Union has been struggling to find an appropriate policy to apply to North Africa and the Middle East," said Clara O'Donnell of the Centre for European Reform. "We are really at a point where there will be lots of difficult questions and I think right now the EU is clearly uncertain how it's going to address them." ..."There is a risk that things go very badly," said O'Donnell.

"Over the last few weeks a certain amount of complacency has crept in," said Simon Tilford, chief economist at the Centre for European Reform in London. "But I don't think much that happened in the last few weeks has been very favourable." At first, investors viewed the pact, presented as a sign of the eurozone growing closer together, as a step toward growing economic cooperation or even fiscal union, said Tilford. "But when they looked a bit more closely at what that is actually going to include, it is coming up short again."

Charles Grant, director of the Centre for European Reform said that some European ministers argue that Britain's refusal to be involved in the overhaul of the eurozone has made life extremely difficult for other non-euro countries. He said "There is a feeling among the Poles, Swedes, Danes and others concerned about this Franco-German initiative that Britain is partly to blame, because Britain, rightly or wrongly, has told the Germans they don't want to be involved.

"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."

On the tactical front, the Bundeswehr invested heavily in tanks and armoured brigades. "Their role was to absorb the first wave of Russian tanks advancing across Europe, and halt them, in order to give the US time to come to the rescue," says Tomas Valasek, of the Centre for European Reform in London. "Germany has been saddled with the burden of the past in this regard, and it is right to change it".

"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."

"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."