05/12/2011 18:11 GMT | Updated 04/02/2012 05:12 GMT

Europe and the Nation State

The eurozone has had more drinks this year in the Last Chance Saloon than George Osborne's had hot dinners. Here we go again in a make-or-break week.

Expectations are quite high that this time the Europeans will come up with something that rises to the moment when they meet in summit formation on 9 December. I dread to think how the markets will react if it turns out yet again to be a damp squib. At the very minimum the immediate crisis demands a green light to the ECB to do whatever it takes to calm the bond markets.

There are all kinds of cross-currents running beneath the sovereign debt crisis. For example, more than a few eyebrows were raised the other day when both the French and Germans invoked the spectre of war between European states if the European Union fell apart because of the euro's collapse. Chancellor Merkel never ceases to warn that the survival of the EU is intimately linked with that of the eurozone.

But, war? Surely not. After the blood-letting of the two 20th century World Wars (and let's not forget the Franco-Prussian War of 1870-71 which cost almost a million casualties on both sides), hasn't Europe once and for all learnt its lesson?

To paraphrase, Clausewitz, European soccer competitions and the Eurovision Song Contest have become the pursuit of war by other means. That's about as belligerent as it gets these days (though given the skullduggery behind Eurovision voting, things can get very belligerent indeed).

So, was it just political scaremongering by France and Germany? Yes and no.

Yes, because Merkel, and to a lesser degree, Sarkozy, want to frighten the eurozone countries into a degree of integration, both fiscal and political, that they would not otherwise countenance (and still may not). In time-honoured fashion, the Franco-German alliance is trying to hatch a common plan to fix the outcome of the crucial 9 December European Council in the hope that, as in the last half-century, what France and Germany want, they usually get.

No, because we should never forget that the genesis of the EU was a pact between a coalition of the invaded, occupied and defeated from the Second World War. One of the reasons that Britain has always been the odd one out in its post-war relations with continental Europe is that it did not fall into any of these categories. Even today, there is a lingering resentment of us in France for not surrendering to Hitler as Marshal Petain did. There is an older generation that will never make its peace with Britain, because we sank the French Mediterranean fleet at Oran in 1940 to stop it falling into the hands of the Third Reich.

Merkel has been constrained in the euro-crisis by a German folk-memory of the great inflation under the Weimar republic. But, there lingers also in the DNA of France, Germany, Italy and the Benelux countries - the founders some 60 years ago of the old European Economic Community, the forerunner of today's EU - the notion that they came together to make war between them forever impossible.

Chancellor Kohl always used to argue that German hegemony in Europe would only be acceptable if tied down inside the EU founding fathers' plan for "ever closer union" and its sovereignty-pooling arrangements. This was why he chose to overcome the German voter's reservations about abandoning the deutschmark for the euro. Now, the next stage in the plan is fiscal union, a very close cousin of political union, the only thing that will ensure the long-term survival of the euro. The trouble is that this is now widely seen, not as a means of containing German power, but as the subordination of eurozone nations to economic policies decided in Berlin, even though budgetary discipline would be maintained through the Brussels institutions and the European Court.

Nowhere is this felt more keenly than in France. Sarkozy has been explicit in his contradictions, declaring that fiscal union will not detract from the Gaullist tradition of national sovereignty. It is hard to see how these two things can be reconciled. Time will reveal whether the deal struck between France and Germany today is a fudge or one in which one side has yielded substantively to the other. Either way there will be months of painful, detailed negotiation, if the goal of an agreement across either the 27 or the 17 is to be achieved..

Despite all the facile talk a few years ago about the arrival of the post-modern European state, the EU has always been an arena for the resolution of competing national interests. A time of crisis throws this into stark relief.