Press

"The plan has caused political consternation and market panic," observes Katinka Barysch, deputy director of the Centre for European Reform think-tank.

The Centre for European Reform's chief economist Simon Tilford says: "I don't think the current membership of the euro is written in stone." For a country to leave, he says, would be "very messy and risky" but it is no longer inconceivable. … Would Italy [which already has huge debts] be able to underwrite another X billion of debt, given that the markets might be sceptical they would get it back? I don't know," Tilford says.

"Die Körperschaftsteuer gehörte zu Faktoren, die die irische Wirtschaft über Jahre haben wachsen lassen, auch wenn sie nicht allein für die Ansiedlung einer Vielzahl ausländischer Firmen verantwortlich war", sagt Simon Tilford, Wirtschaftsexperte des Centre for European Reform.

"Obama will continue to think of engaging China as a top US priority, and seek to get along with Russia and other emerging powers," Tomas Valasek of the Centre for European Reform in London, wrote this month. "The issues that will compete for the president's attention over the next few years will be Iran, Afghanistan and the Middle East peace process. Neither the EU nor Eastern Europe is likely to move up his agenda."

"Taken out of context there is obviously merit to the Franco-German proposal. But the timing could not have been more damaging," wrote Simon Tilford, chief economist of the Centre for European Reform.

Simon Tilford, the chief economist for the London-based Centre for European Reform, says a request from Ireland for other eurozone members to stabilise the Irish banking sector essentially amounts to support for the Irish state budget: "Investors have started to shun Irish government debt because they are worried about the [possible] liabilities in the country's banking sector - because the Irish government has essentially underwritten the debts of the private banks," Tilford explains.

This disconnect has a broader geopolitical context. Styling himself America's "Pacific president", Obama appears fixated on the rising stars of Asia, principally China and India, and on Russia's continuing leverage, argued Tomas Valasek in a paper for the Centre for European Reform. "The president believes the rise of emerging powers … puts new constraints on America's ability to set the global agenda. So he is courting China, Russia and other new powers to encourage them to take a greater stake in managing the global order," Valasek wrote.

Clara Marina O’Donnell, a defence expert at the Centre for European Reform, says European cuts are so serious that they make this week's summit look like "a surrealist play". She notes that Nato's new "strategic concept" will set out fresh ambitions for the alliance to deal with cyberwarfare, missile defence and terrorism, "yet in Europe, the very resources to deal with those threats are being cut back hugely". There are hopes that two new European Union directives setting out competition rules in defence procurement will reform the sector.

"Unless the EU changes track and agrees to make the EFSF (rescue fund) permanent and the ECB steps up its purchases of the hard-hit countries' government bonds, investors will believe that default is inevitable and demand correspondingly punitive interest rates," said Simon Tilford, chief economist at the London-based Centre for European Reform. "Contagion to other member-states will be all but inevitable. If, and when, it reaches Spain, the crisis risks spiralling out of control," he said.