Next Gen News

As a Brussels correspondent in the 1990s, Toby Helm reported on the EU at its zenith. Now, as Observer political editor, he returns to a city of uncertainty – over the Greek debt crisis, the future of the euro and the whole political project

To catch up with Europe's progress, Schwaiger, a former press officer who retired in 2003, returned to a Brussels summit last week to take the temperature. Much had changed. "The historical idea has faded," he said wistfully. "When we started it was about Germany and France and the Benelux countries building a new Europe to stop the endless wars. Germany, and that generation of Germans, was ashamed of Hitler. It was about creating security, a secure Europe and a secure economy. Then they wanted to have Europe as their new home country."

In the run-up to the euro's launch, painful battles were fought between France and Germany to establish a stability pact to ensure members of the currency zone observed fiscal discipline. Euro countries, it was agreed, would have to have debt-to-GDP ratios of no more than 60% and deficit-to-GDP ratios of no more than 3%. "It was about Germany getting a stable euro, a euro like the deutschmark," observed a German official. But when the original 11 countries were admitted in 1999, no fewer than six were allowed in with debt levels well over the required level. The rules were waived as long as their debts and deficits were moving in the right direction.

In the case of Belgium and Italy, their debt was nearer 100% of GDP than 60% – but in they went. The same leniency was shown when Greece joined in 2001, with a debt ratio heading towards double the level required. "We might have been a little too relaxed with Greece," said Richard Corbett, a former Labour MEP who now works as an adviser for Van Rompuy. Within a few years, France and Germany were also busting the stability pact rules.

Optimists in the EU try to convince yourself that something good could come out of crisis - that means greater economic integration and harmonization of taxes - steps towards the individual EU economy, which Prodi dreamed. One of the arguments the Commission sends to calm anxiety make that Europe is no stranger to crises - yes, she says she has always thrived on it.

Mark Gray, a spokesman for Barroso, said: ".. The temptation to look back at the past through rose-colored glasses, but there were always ups and downs" \ He points to the queue of countries wishing to join the EU and the euro as evidence that they are now more than ever in a globalized world. Corbett believes that Europe could emerge even stronger from it. "This is what we hope will happen," he says. "But you don 't hear much about in the British press."