The week started off in a way that looked constructive. Facing a major run on the Euro and the debt of the Club Med members, EU responded constructively. A prototype of a European Monetary Fund was launched and the ECB assumed wider responsibilities than seen before in running day-to-day monetary policy. So far, so good.
To anybody with a bit of insight it has been clear that the Eurozone was a project where everybody wanted the benefits of a common currency without being willing to sacrifice political sovereignty. Everybody wanted to maintain the fiscal policy as a purely national matter.
The "Stability Pact" was a feeble attempt at establishing some rules that would at least impose some limits on the most profligate members. The Pact envisioned a system of economic sanctions on those member states that did not adhere to some simple rules regarding government debt and budget deficits.
As it is now obvious, nobody took those rules seriously, and the sanctions were never applied. Greece's lack of budgetary discipline threw the EU into one of the deepest crises ever.
Some of the ideas flying around after last week-end's panic summit were in fact quite sensible. One idea presented yesterday was to equip the European Commission with some powers to approve budgets before they were implemented. In order to avoid the nasty idea that the EU Commission would try to exert influence on national budgets, the approval was suggested to take the form of a "peer review". This would imply that representatives of other EU countries – but not the Commission - would review a country's budget.
The idea was then to let the "review committee" suggest changes and ultimately even sanctions that could take the form of withdrawal of EU subsidies.
This seems reasonable, particularly given that German Chancellor Merkel and French President Sarkozy in the days leading up to the summit jointly vented the idea of giving EU more authority in budget matters.
But now the crisis is over (?) and we are back to reality. And the reality is that France has no intention to hand over budget authority to Brussels. A French government spokesperson briefly stated that the authority over budgets lie with the national governments and not with the Commission. The Swedish prime minister expressed that the peer review was only necessary for country with "bad finances". One can only guess about the reaction in London, but it is unlikely to be positive.
So it goes. The reality is that Europe is not yet ready for the political demands of having a monetary union. Everybody wants a free ride on Germany's tailcoats. One can only guess how many more crises are necessary to either break up the Euro Zone under the weight of huge differences in government finances and productivity or to remove the political resistance to the necessary integration.
Nationalism was invented in Europe in the aftermath of the 1848 Paris Commune as sovereigns tried to protect themselves from revolutionary ideas spreading. Among the many results were national hymns, the sudden creation of national languages, national education system, a professionalisation of the administrative systems.
And it may still lead to the collapse of the most ambitious attempt at creating a European Union.