The British model under which European co-operation is limited or kept at an inter-governmental level (preferably with national vetoes). The cornerstone is seen as the single market, allowing free movement of goods and eliminating trade barriers. Meanwhile, the UK has always favoured EU enlargement in part to weaken prospects for closer integration in core economic areas such as harmonising taxes. Britain has won new allies with the accession of Eastern European nations which tend to be more Atlanticist in instinct and put greater onus on free markets and competition than social protection.

United States of Europe The dream of some of the EU's founders such as Jean Monnet and Altiero Spinelli, the idea of a federal Europe has receded as the EU has enlarged. It describes a division of responsibilities between a central authority and states, regions or provinces. But it is usually coupled with the term "superstate" in Britain, or shorthand for closer European integration, for example on the economy, taxation, agriculture and the environment. Founding EU nations (France, Germany, Italy and the Benelux countries) traditionally supported closer union, though even in these, its appeal fades.

Multi-speed Europe An idea debated much over the past decade which would allow an inner core of countries - probably based on France, Germany and the Benelux - to forge ahead with closer integration, leaving Britain and others in the slow lane. It already exists with the single currency and the Schengen passport-free zone. The Nice Treaty allows groups of nations to identify areas where they want to co-operate more, though this has never been put into effect. If France and Germany could agree on common objectives they might use the mechanism, for example, to boost economic co-operation in the eurozone.

Doubts about the enlargement process emerged as a central theme fuelling opposition to the treaty in both France and the Netherlands .... not only hostility to the prospect of Turkish membership, but also criticism of the social and economic effects of last year's EU enlargement...

... plans for accession talks with Croatia, Turkey, Albania and the rest of former Yugoslavia have been thrown into varying degrees of doubt.

Bulgaria and Romania ... still have strong hopes of entering, although ... facing "the most difficult phase of the process" requiring ratification by all 25 present members.

Ukraine... in an even more tenuous position, as ... Georgia and Moldova. ... fears about central European workers with low wages taking French workers' jobs and factories moving from France to eastern Europe.

Yesterday, the European Commission tried desperately to disentangle worries about enlargement and the constitution. ... But officials acknowledge the prospects for the continued expansion of the Union are looking poor. Germany's Christian Democrats ... have already indicated they may try to block the accession of Romania and Bulgaria, widely regarded as ill-prepared for the burdens of membership. (CDU) also opposes Turkey's eventual membership.

Croatia, which was to have begun entry talks in March, is in a limbo of its own .... Nevertheless, Berlin and a group of central European states champion Zagreb's cause.

Meanwhile, the countries of the western Balkans - Serbia, Bosnia, Montenegro, Macedonia and Albania - risk becoming forgotten even though their small size could make them easier to accommodate than Turkey or Ukraine.

... problems for Poland, which is to keen to promote stability in the former Soviet republics on its border.

The Polish concern is that failure of the constitution would leave Europe too absorbed by its internal problems to use the lure of eventual membership to influence its neighbours. ... Poland's prime minister, said it would be difficult in the near future to conceive of any EU expansion ...'

... deep-seated economic, political and cultural factors that are pushing Europe and America apart. The first is romantic anti-capitalism.

... old-fashioned right-wingers who bear an ancient grudge. The reason for their hostility to America is that traditionally the US has disapproved of European imperialism. Suez... America's lack of sympathy towards the imperial problems of its allies ...

... While the Soviet Union was powerful, mostly they kept silent - though of course President de Gaulle didn't. With the Soviet Union gone these right-wing critics see no reason to support America in anything it does. ... virulently opposed to the current campaign in Iraq.

... Americans aren't noted for their ability to turn the other cheek. Angry at European criticism and, as they see it, ingratitude, they've been hitting back sharply.

(a former Democrat Senator): "I don't ever again expect to see the French or the Germans pointing their guns in the same direction we're pointing ours. They're petty, they're envious and in their guts they hate us."

... a growing cultural difference ... low birth-rates. ... that Holland will become a majority Muslim country within a few decades ...

... Europe is secular and lacking in Christian religious faith compared to the American heartlands.

... A picture is painted of decadent European societies without religious belief and without purpose. According to some American pundits these societies are selfish pessimistic and cowardly, with most of the dirty jobs being done by vigorous Islamic immigrants, who despise their hosts as much as their hosts secretly fear them.

... I don't believe "the West" of the Cold War can be reconstituted. Too much has changed. ...some loosening of the more irksome ties, for instance within NATO ... might be in the best interests of both. '

It's harder to see the logic of an open breach. ... many Americans closer to the social democratic European view than that of their own government. Similarly, some Europeans are admirers of the dynamic nature of Anglo-American capitalism.

As a political idea "the West" is obsolete. But there's a reason for avoiding a quarrel. ... enough on our plate. We have the debt burden, the effects of globalisation ... not a good time to pick a fight.

... progress has been patchy.... In France and Germany, the political trend is moving in the opposite direction.

Why ... reform so difficult? ... large number of consecutive elections. ... the referendums ... In Germany... elections every year, making it difficult to enact unpopular measures.

... most continental European countries are governed by consensus- based coalitions. ... public support for reform in general, but it is much more difficult - if not impossible - to reach consensus on every detail.

... the failure by governments to explain reforms. ... portrayed economic reform primarily as a belt-tightening ... rather than as a long-term strategy to improve economic growth.

... With wage costs in eastern Europe about a tenth of those in the west, it is no surprise that electorates are sceptical about the benefits of competitiveness-based reforms.

... education systems and liberalisation of markets, including but not only labour markets. ... lack of qualified labour, restrictive hiring-and-firing laws and excessive regulation.

... the sequencing of reforms ... Starting with cuts in unemployment and welfare pay is not a clever way to start a reform programme in the middle of a recession.

... governments ... pass the responsibility for unpopular reforms to the EU. ... this strategy has backfired. ... The buck has passed back to national governments where it belongs.'

... A Protestant pastor's daughter who spent the first 35 years of her life under east German communism

... notched up 10 regional election victories since ... 2000

... a mobile phone addict and likes to send text messages during meetings - but is also known as being cautious, even mistrusting, towards those outside her circle.

...emotionally controlled ...

...values political freedoms (she swam against the German tide by supporting Washington on the Iraq war) and has moved the CDU nearer to liberal market economics than under Mr Kohl.

She lags behind (Schröder), a polished performer and savvy tactician, in popularity surveys, and he ... the campaign would boil down to a battle between him and her.

... childless and a divorcee

"She can deal very effectively with complex issues, and as a scientist she argues rationally ..."

... fear of competition has been confused with anxiety about the effect of EU enlargement... On the right, there is strong opposition to launching membership talks with Turkey later this year.

... Nine states have already said Yes, including two of the largest, Germany and Spain. Their views should not simply be dismissed because France has voted No. Nor should those of the countries yet to decide.

... a great desire among ordinary voters to have a real say on the future of the EU. They have not been properly consulted for far too long. The wrong reaction would be for EU leaders to retreat once more behind closed doors, call off the political process and try to save the parts of the treaty they like best in a constitutional fudge.

... towards prolonged political stalemate on economic reform, the Doha round of trade liberalisation, negotiations on the long-term EU budget, and the future enlargement process.

... allow the ratification process to continue, even if it does mean that others may vote No, including the UK. Only when it is clear where all the members stand can a sensible effort be made to rework the treaty. The French No is a shock. It is also an opportunity: for a fundamental debate to be held on the shape of the future EU.

... the French did not just say no to a particular, cumbersome constitutional treaty, despite the fact that its main architect was a Frenchman. They said no to what the EU has become since the fall of the Berlin Wall. No to a much-enlarged EU where France is no longer in the driving seat. No to the prospect of Turkish membership. No to Anglo-Saxon-style economic reform: deregulation, free-market liberalism, Thatcherism imported via Brussels. And, of course, no to lupine Jacques Chirac, and the Parisian governments and elites they feel have failed them.

... a no of fear... Fear of immigration. Fear of change.

... the beginning of the end of the EU? It would be foolish to reject out of hand that possibility. All earlier attempts to unite Europe, starting with the Roman empire, have failed. Why should this one be the exception? Unlike all those earlier empires, the post-modern empire of the EU is ultimately built on the consent of the people. Not just in France, the peoples of Europe increasingly feel that the EU is not answerable to them.

... the "democratic deficit".

... reassuring voices ... that is just another setback ... The EU ... has always advanced by taking "two steps forward, one step back". ... leaders will come up with a treaty-lite, preserving most of the key institutional changes ...

Optimists suggest the ratification process can continue... The countries that have said no may even be asked to reconsider. Super-optimists suggest that, perhaps with some changes and reassurance from European leaders, the noes might be turned into yeses... I don't believe it.

... Europe's ambiguity about itself.

... relaunch of the European project.... A weakened Chirac may have to call on Downing Street's favourite Frenchman, Nicolas Sarkozy .... Merkel, who, like Mr Blair, is both pro-European and pro-American. But it will still be a very tall order.

... Economic reform, European budget talks and the opening to Turkey could all be stalled. One of the EU's biggest problems is that people in different countries object to (the EU) for such diverse and incompatible reasons that if you move to satisfy one segment you further offend another. And some deeper sources of discontent lie beyond our control, for example in the way rising China and India are taking jobs out of Europe.

... The last time the French rejected a major European project was more than half a century ago, when the proposed European Defence Community was voted down in the French parliament. British diplomacy then cobbled together a substitute called the Western European Union. It wasn't half as good, but it was better than nothing. '

Dissatisfaction with the current French government

Worries (mostly misplaced) that the constitution moves the EU in an "Anglo-Saxon" direction economically

General concerns at the development of the EU, especially a perceived reduction of France's influence in the enlarged Union

Concerns at possible future membership of Turkey in the EU.

... for the first time, a large founder member has directly opposed the current process of European integration. '

... one of the fundamental aims of the new EU constitution has failed: bringing the EU closer to its publics.

... "a lot of the smaller member states are saying, 'Why should France take the decision for everyone?' "

... to launch "core" Europe out of desperation and crisis rather than strong political dynamism looks like a recipe for failure.

Nor is it clear what a core Europe would do or indeed whether its membership would be much less than the current EU of 25...

In the short-run, France may lose political capital in the EU, having failed to deliver its public's support.

... EU decisions must take more account of French concerns to woo back the French voter.

But other countries have voters to placate too.

An EU in crisis and one where there is more focus all round on national concerns and less on pan-European compromise will be one where decisions could get increasingly difficult for the foreseeable future - from budget agreements to decisions on future enlargements (although the Bulgaria and Romania enlargement treaty is already signed).

An EU gridlocked and inward-looking at a time of major international challenges

...whether the EU goes ahead with membership negotiations with Turkey in the autumn, or whether it reneges on a major international commitment.

The two biggest decisions of the enlarged EU of 25 members have been agreeing the constitution and the deal with Turkey on negotiations. If the enlarged Union fails on both, its record of achievements will be reduced almost to nil.

Some suggest the EU could take some of the key parts of the constitution - an EU foreign minister, new voting arrangements, the European Council presidency - and push these through separately.

... Better would be to go back to the drawing board with the aim of producing a much more understandable accessible text: but for now this looks the least likely outcome.

... Ask why, and the answers come in a cascade. Globalisation has stolen jobs. Europe's welfare system is buckling. Immigration is challenging social, and secular, tradition. High unemployment sits alongside rising crime. Jihadist terrorism threatens our physical security, China's rise the familiar global order. North Korea has nuclear weapons, Iran wants them. America, once a reliable guardian of the status quo, now deploys its military might to overturn it. Political leaders are feckless, voters fickle.

There is more or less truth in each of these observations. Fearful citizens and disoriented politicians are grasping at fragments of a bigger story. We live in an era in which everything has changed and most things are still changing. Power in all its forms is shifting rapidly and unpredictably. You might even say that we are at the beginning of history.

... features of the era in which I grew up... The west ... generated the ideas and wealth. Most of us expected jobs for life in a world of ever rising prosperity.

... The end of the cold war has left the US as the sole superpower. But it has greatly weakened America's interest in Europe and Europe's dependence on America. How much do the values of resolutely secular Europeans have in common with the God-fearing citizens of the American Midwest?

Economic growth comes mainly from the east. China and India are now important engines of the world economy. China will fairly soon be second only to the US in its share of global output. India - a place of desperate malnutrition in my youth - will be the world's technological hub. North/south will further lose its relevance as Brazil and Indonesia follow these re-emerging giants. Demography... Much of Europe is shrinking. So is Russia. By 2020, the world's population will have reached close to 8bn. Some 56 people in every 100 will be Asian. Only five will come from western Europe and four from the US. The west, if we can still call it that, suddenly looks a very small place.

... can China replace the US as Asia's most important power without a collision? Could Japan, victim of Hiroshima and Nagasaki, awaken from half a century of pacificism to decide it too needs the bomb?

... the coming decades promise a transition from a unipolar to a multipolar world. The war in Iraq has not made the US any less vulnerable. And the economic insecurity born of Asia's manufacturing might is as potent in America as in Europe.

... climate change and Aids...

... We should be careful about nostalgia. ... The cold war was neither as conflict-free nor as inherently safe as it sometimes seems in retrospect. ... we are further now from a world war than we have been for a century.

... benefits of globalisation. cheap DVDs and T-shirts, effortless travel and communication, the explosion of new technologies. Modern science and medicine are transforming the quality of our lives.

... Danger lies not so much in the facts of shifting power and of ever tighter global interdependence as in an unwillingness to admit them.

... For the second half of the last century the continent's peace and prosperity were built on two bargains: one swapped the nationalism that had brought two world wars for a project of political integration; the other married efficient economics to social cohesion. Both of these must now be remade (not, I stress, abandoned) to fit the new geopolitical and economic landscapes.

... the cries of pain, anguished echoes of a fatalism that says Europe - indeed the west - can flourish only if it defends the boundaries of yesterday's world. The truth, of course, is the reverse. '

... the latest poll showed the rejectionists’ support growing to 55 per cent — the 13th poll in succession to put the ‘no’ camp ahead.

... With two days of campaigning left, the French political establishment was left hoping for a Liverpool-style comeback.

... one option being discussed in senior diplomatic circles is for candidates in the French presidential election in 2007 to promise to ratify the treaty in parliament rather than by referendum.

... By announcing ... a referendum on the constitution in 2006, Blair effectively removed Europe from the agenda of the recent election.

... If France votes no, Blair is off the hook. If France votes yes, it is not clear that Britain's own pro-constitution forces can win the referendum there.

... if every other country has voted to ratify the constitution ... it is possible that a major campaign could turn the situation around.

... Gordon Brown, the chancellor of the Exchequer, who is slightly less enthusiastic about Europe, would be a more credible leader on the issue. But Blair would certainly like to make a European victory the capstone of his legacy.

... electoral parallax: The actual effect of the vote is not the one intended, having been displaced from another target.

... Few if any of those voting against the constitution ... consider themselves voting against European unity as it exists. They are voting against fantasies about what the EU might become, or because of particular grievances against the EU.

In the Netherlands they are voting against immigration now and in the future, the individual losses they suffered from undervaluation of the guilder when the Netherlands joined the euro, and for such intensely persuasive intangibles as "remaining Dutch," as against dissolving into a Europe run, and overrun, by foreigners.

The French are voting against the abstraction called "liberalism," understood as savage American market capitalism set on destroying the European social model. They are voting against Polish plumbers who will fix French sinks at a price that ruins French plumbers.

They are voting against the threat that NATO will control European defense. They are voting against a thousand aspects of the particular form the EU has assumed today - against qualities and defects it has acquired over the years.

... against expansion, and the prospect of still further expansion. They are voting against Turkey and Ukraine in the EU, and also against the loss of power of original EU members to new members, and big Western countries to little ones in Eastern Europe. They are voting against having Russia and Iraq on Europe's frontiers.

... against Chirac and Prime Minister Jean-Pierre Raffarin, and the whole French political class, and in the Netherlands against an ineffectual coalition government and a Parliament that pre-emptively approved the constitution by 80 percent when (according to a May 19 poll) only 27 percent of the people who intend to vote favor it.

... A writer in Die Zeit says, "the deep source of the malaise is not the constitution but Europe; one has the impression of having lost control over it."

A (German) Christian Democrat deputy who was member of the convention that wrote the constitution said recently: "Until the start of the 1990s, we believed that German and European interests were synonymous , identical. Today, opposition to that idea is visible, slowly developing over more than 10 years. It began with hostility to the euro , which still exists."

... Expansion was all but impossible to reject, once the cold war ended. But quantitative change becomes qualitative change, as Marx observed. The EU was changed by expansion in a way that now seems to exclude possibilities of integration and common action that were part of the EU's original development.

It is possible that the rejection of the constitution might provoke a radical restructuring of the European unification project. In that case, the present crisis could prove to have been a salutary one. But the opposite is also possible. In either case, Germany is at the heart of the affair.

...What people are voting against is ... the idea of any unified constitution that attempts to impose a single system of government on the whole of Europe and purports to harmonise away the political philosophies, economic preferences and social traditions developed in different nations over hundreds of years.

... it’s the economy, stupid.

... Their living standards are falling, their pensions are in danger, their children are jobless and their national pride is turning into embarrassment and even shame. In sum, they feel that their countries, which numbered among the world’s richest and most powerful nations as recently as the middle of the last decade, have gone to the dogs under the leadership of the present generation of politicians.

... transformation from thriving full-employment economies to stagnant societies where mass unemployment and falling living standards are accepted as permanent facts of life.

... If Europe’s economy remains paralysed, then the federalist project is clearly dead, as are all hopes of further significant EU enlargement. But if the economy recovered, the disillusionment with EU politics might quickly vanish.

... all of the major shocks to the world economy since the ECB was created have originated outside Europe — the internet boom and bust, the attacks on 9/11, the Iraq oil shock, the rise of China, the corporate scandals on Wall Street. Yet in every case the euro zone has suffered more economic and social disruption than America, Britain or Japan. '

... change the objectives of the ECB and .bring central bankers under the explicit political control that is taken for granted in Britain, America and Japan.

Over in Brussels ... strategies for dealing with a No vote in the referendums ...

... a Europe-wide solution sadly may not be the answer. We may need a multi-speed response.

A French No - Barring a significant turnround in the last few days, a sudden upsurge of enthusiasm for Jacques Chirac or a Bush endorsement for the No campaign, it is hard to see how a No vote can be avoided.

... a strategy of sucking up to France would be the optimum response. Tell her how big and clever she is; how Europe can't function without her; say we'll do anything she wants to win her back apart obviously from reopening the treaty.

... So Turkey's out of the window for a start. We revoke their chief negotiator's pass as soon as he arrives to begin accession negotiations and bundle him over the border near Bulgaria. Turkey is bound to be angry so can we dream up some new status like super-privileged partner and all-time best friend to keep it sweet? It seems a big part of their concern is that the EU no longer feels like a French institution - they think it's run by foreigners now. ... throw them a few baubles, the British rebate, French as the sole official language, the Marseillaise as the new EU anthem, pain au chocolat at all meetings and exemption from all state aid and competition rules. The danger is they might try to press ahead with Germany to form a new inner core....

Dutch No - We use the "supernanny" strategy. We cajole them in a loving yet menacing way, making it clear their behaviour is unacceptable ... so the message is: let's put it behind us, apologise to your EU brothers and sisters and damn well ratify.

... This is more difficult if France votes No as well and we are seen to be treating the two differently.

... Then again if both vote No, well, we didn't really need a new treaty anyway.

British No -- Screw 'em. They've had their chances. No one can say we haven't been patient but now it's the end of the line for you rosbifs. We're going on without you, without your filthy rebate and your stinking opt-outs, your "I'm the transatlantic bridge", your chancellor flying in for the morning to tell us how lousy we are and then leaving before lunch because he's got an urgent reception with Lanarkshire trades unionists. That's the message. You had your shot, Blair; we've got Zapatero now. As for Britain at the heart of Europe, you're at the heart of nowhere now, with your new allies Switzerland, Leichtenstein, Norway and Iceland. Wrap up warm for those summits.

Czech No -- Who the hell do you think you are? We've just let you in to our very prestigious club and you treat us like this. Just because you are now a full member doesn't give you the right to behave like one. Do it again.

Danish No -- See Netherlands but without the soft-soap. See Britain for a vision of your future if you go on like this. '

The European Union would probably become a Magna Helvetia - a big Switzerland - or a museum of high and old culture and the good life.

... followed by ... a combination of disarray and confusion, if not paralysis.

In their combination of fear and narcissism, French voters

... new members of the Union ... enthusiasm and the kind of energy evident in Asia: an appetite for success and a hunger for results. In France, on the other hand, a self-defeating, unrealistic, messianic search is going on for "another Europe," in an anachronistic attempt to cling to a reassuring past that cannot be recreated.

At a time when the pace of history seems to be accelerating, particularly in Asia, a French "no" vote would lead the European Union to sit by and watch as the train of history leaves the station without it.

Such a demise would be the indirect result of the interaction in France of three factors. The first is the alienation of a majority of the French from the cause of Europe. In the past, for the French, Europe was a way of pursuing national ambition through other means, of prolonging past glory, whereas for the Germans it represented a way to break from their past. Europe was also a way to impose badly needed structural reforms on reluctant French citizens in the name of the Union.

Today, by contrast, after last year's EU enlargement, France no longer sees itself as the head of the European family. The French feel ill at ease sitting at a table with the distant and largely unknown cousins who have recently joined the club. Europeanization is no longer seen as the path to modernity but as a threat by all those who make the mistake of equating Europeanization with globalization, and blaming Europe's enlargement for the transfer of jobs.

... second factor ... in recent political history they have never been so terribly morose and pessimistic about themselves, their present performance and their future opportunities.

A high level of long-term unemployment affecting the young in particular ... the demand for equality has canceled any sense of fraternity ... liberty has become, above all, the liberty to take to the streets to block any reform and to defend the interests of one's own sector.

The third aggravating factor is the political elite itself. The divorce between society and the political class has been encouraged by the weakness of France's leadership. Lacking inspiration and conviction, "they" may have failed in their duty to guide and educate the citizens of France about the cause of Europe.

The weakness of France's leaders has been exploited by demagogues and political opportunists who have managed to stir fears and frustrations. The "no" camp has surfed a wave of negative emotion and arguments that are often irrational.

A victory by the "yes" camp would hardly bring about the rebirth of an energetic, dynamic and self-confident Europe, but it would at least prevent Europe falling, as France has, into a narcissistic identity crisis. Today, for reasons of demography and moral energy, the future lies more with Asia than with Europe. But that is no reason to turn away from the European project. The future belongs, like victory, to those who desire it most, not to those who are doing their best to defeat themselves. '

... a "no" vote would deprive France of one of her main assets as a major player on the international stage.

... the substantial effects of a "no" on partners and issues lying outside the EU framework.

Since the most obvious consequence of the constitution's rejection would be to plunge the EU into a protracted period of institutional and political introspection, Europe's partners would no longer be able to count on the same level of European commitment.

... the Middle East peace process or Western efforts to limit the proliferation of weapons of mass destruction.

Efforts to prevent or limit violent conflict in Africa ...

... the United States would presumably have less cause to worry about the lifting of the EU arms embargo on China

... While America might welcome the opportunity to pick and choose its favorites in a weaker and divided Europe, as it did in the early stages of the Iraq crisis, the overall effect would be negative for the United States: A navel-gazing, disengaged Europe is not going to be of much help in a world in which the United States has few other friends of similar economic and political weight.

The effects of a "no" vote on Turkey's prospects of joining the EU would be significant, but need to be set in perspective. A French and/or Dutch rejection of the constitution would presumably defer Turkey's bid for membership for an indefinite period, given that anti-Turkish sentiment has been an important component of the "no" campaign in both countries. But a "yes" vote would not, in the French case, necessarily have a very different outcome, since France modified its own constitution last March so as to subject future EU enlargement to a referendum, a hurdle that Turkey may well not be able to pass given French popular attitudes.

... It is in the Balkans that a "no" could have inordinately baleful consequences.

... French "no" would plunge much of the area into a pit of despair from which nothing good could emerge.

... limiting damage in case the "no" prevailed, the EU's leaders should promptly reaffirm the commitment they made ... to the Balkan states.

... Ukraine's aspirations for EU membership would also suffer, with a mitigating circumstance:... Kiev could presumably exercise the option of a close alliance with the United States.

... a weakened and inward-looking Europe would find itself at a significant disadvantage in its dealings vis-à-vis an increasingly un-Western Russia and a very seriously disgruntled Turkey. These powers would presumably demonstrate greater assertiveness in such circumstances at the EU's expense.

... Investors must not only believe that the currency union is impregnable but that each sovereign borrower is as good as the other. The latter belief assumes that all the fiscal authorities will behave in an equally responsible manner or that there is an implicit bail-out. These assumptions are highly implausible.

... I am not saying that the eurozone will disintegrate, or that Italy is doomed to Argentina's fate either. I am saying that tough choices and tougher times do lie ahead. Only with radical structural reforms, the most disciplined wage behaviour and the greatest possible fiscal rigour can a country in Italy's predicament sustain stability and return to healthy growth.

Monetary union was not the easy option. It was the tough alternative to an inflationary bonfire of Italy's debt. If the country fails to rise to the challenge it confronts, a default or even a forced withdrawal from the eurozone is perfectly conceivable. Italy has willed the ends. It must now will the means. '

...Netherlands, where No campaigners have focused on the danger of big countries running the EU.

"Countries with many inhabitants will have an even bigger say in the council of ministers at the expense of smaller countries like the Netherlands," says Geert Wilders, a rightwing Dutch MP. ... one such large country could one day be Turkey, predicted to be the most populous member of the EU by the time it eventually joins.

"I am strongly in favour of good relations with Turkey," he says. "But a good neighbour is not the same as a member of the family. An Islamic country will never be a member of the EU."

...a winning formula - combining Dutch fears over a loss of influence with opposition to Turkish EU membership...

... Britain, France and Germany are driving EU foreign policy on Iran, while France and Germany engineered the collapse of the EU's stability pact because they could not stick to the rules. ... this trend will be reinforced by the constitution's new and simplified voting system...

Under the current byzantine voting system, agreed at the Nice summit of 2000, countries are awarded weighted votes that bear no relation to their size.

...Germany (population 82m) has 29 votes in the Council, the same as France (58m). It also gives Poland and Spain, with populations of just under 40m, a disproportionate amount of clout with 27 votes.

The new voting system allocates votes according to population, a German condition in the EU constitution negotiations.

.. Although France no longer punches at the same weight as Germany, the new system still increases its power from 9 per cent of the total votes under Nice to 13 per cent.

The biggest losers are Poland and Spain - which fought a fierce rearguard action to defend the rights they won at Nice - although all the small countries lose out. So why did the small countries agree to this new arrangement?

... an acceptance that the system was based on common sense, but ...smaller member states were too disparate to stand together to fight.

"For an individual country it doesn't make that much difference if your vote is 2 per cent or 1.5 per cent," "Collectively they stood to lose more, but they did not bond together to oppose it."

However, the smaller countries did win tweaks to the new system to ensure they were not rolled over by big countries. A majority under the new system requires 55 per cent of member states, representing 65 per cent of the population - requiring big and small countries to work together.

If the constitution favours larger member states, there is less agreement on the emotive subject of whether it helps to make Europe more "liberal" or more "social".

... "In France it is seen as the start of liberal Europe, and in Britain's it is seen as the start of a social Europe - that is probably a sign that they are both wrong,"

... supporters of either model can find comfort in its 448 articles.

Proponents of a social Europe can point to the incorporation in the treaty of a charter of fundamental rights, which enshrines the right to strike.

... at the heart of the French predicament is that Europe itself is tilting towards a free-market approach, epitomised by José Manuel Barroso's European Commission.

To the extent that the European constitution makes EU decision-making easier, and harder for countries to block new initiatives, there are perhaps grounds for concern for a country that wants to hold back an advancing liberal tide. '

... "She has purged herself of the East"

... Her detachment is that of an intellectual. There's nothing remotely impassioned about her.

... Power. The word always sounds like an accusation when used in conjunction with Angela Merkel. She raced at such pace through the ranks of the Christian Democratic Union ... that nobody knew what she wanted for a long time -- besides power.

... the slush-fund affair hit the CDU and the party was on the brink of losing everything it stands for: decency, morality, honesty. The party needed an angel at that time, somebody whiter than white, somebody whose complicity could be ruled out. Somebody from the East. Oblivious and unsuspicious. Being an outsider was a fortunate historical coincidence at that time.

... Angela Merkel is somebody who always leaves decisions until the last moment.

For a long time, she stood watching at the top of the CDU ... Nobody knew what she was doing, what she stood for, where she wanted to go and what she wanted, apart from power.

... Angela Merkel's power was shaky. She no longer stood on a solid base. Her party asked where the beef was, reeled off its chairwoman's mistakes, her support for the Iraq war, her fawning to Bush. '

Angela Merkel's adversaries are men with very similar résumés.... They attended schools in which the classrooms had crucifixes on the walls, rather than pictures of Ulbricht and Honecker. ... waiting for their opportunity to step up onto the next rung in the ladder. All of them Catholics and fathers, all are still married to their first wives.

They tolerate nobody in their world who isn't like them, who comes from outside. And there can be no greater stranger in this world than a woman who is a Protestant, married for the second time, has no children and comes from the East -- and at the same time happens to be the boss of their world.

... her opponents grew up in times of freedom and affluence. They never had to be particularly courageous because they had everything -- except any real enemies. ... grow up in comfort. And when they were old enough to reach the top, they found that somebody else was already there, somebody who had never had an easy life, who had never been easy herself.

... There are 5.2 million unemployed in Germany: those are Schroeder's unemployed. The Greens are struggling with their visa scandal: that is Fischer's scandal. Merkel has taken the offensive.

Britain is coping better with the transition to a US and Asian-led economy

... Germany is not just ... another country but, increasingly for a Briton ... a different kind of country'

... the material prosperity, the reliable services and the well-maintained environment that most people want from life. Lack of excitement - and 5 million people out of work - almost seems a small price to pay for such a good common life...

... learn from the achievements of their (Germans) ... - to learn how a modern social democratic party worked, how a dynamic economy could be married to a generous welfare state, and how a strong national identity could meld seamlessly with the European project.

... The devastating defeat of Schröder .... a milestone event - akin in its way to Britain's winter of discontent a quarter of a century ago.

... What went wrong for Germany was also what went wrong for Europe. It was not East Germany alone that collapsed in 1989. It was communism more generally, and not just in eastern Europe but across the world, above all in Russia and China. Once these countries, with their billions of skilled but largely impoverished inhabitants, began to become market economies, the writing was on the wall for high-cost welfare settlements in the developed world. ... The prospect that hundreds of millions of Chinese and Indian people will enjoy double or treble the prosperity that their parents knew is the single most wonderful possibility in the modern world.

... It is a world in which Britain, because of the premature destruction of its own post-1945 settlement, is better equipped to make the transition to the market-economy-dominated 21st century than the older nations of the European Union. Now it is the turn of Germany, struggling to reform but highly educated and highly skilled - the key assets for any developed economy in this changing global economy - to go through its own version of that painful transition.

The great challenge for our part of the world is to make the transition from the national and European protectionism of the 20th century to achieve competitiveness in the Asian and American-dominated global economy of the 21st, while at the same time negotiating as well as possible the social and communal disruptions that will inevitably accompany the process. No nation will succeed by opting out.

... Italy and France, have hardly begun to try. Others, such as Germany, are making progress. Britain, by a combination of luck and judgment, is further along the path than most.

This is a bit like the notices people sometimes stick in their cars saying "Thank you for not smoking". It sounds more polite than "Smoking strictly prohibited" but amounts to much the same thing.

By of thanking Egypt for its cooperation in advance, Mr Bush has laid down some important markers by which its future performance will be judged: free and competitive elections, real campaigns by all sides, and the presence of international observers.

...a crucial test for (not only) the Egyptian government but also for Washington, since the credibility of Mr Bush's declared effort to democratise the Middle East hinges on it.

The vast majority of Arabs are extremely wary of his calls for freedom and democracy. This is not to say that they don't share the aspiration but they are suspicious of Mr Bush's motives, believing he is not interested in democracy for its own sake but, rather, as a means for achieving other foreign policy goals.

... Serious pressure from Mr Bush for political reform in Egypt would demonstrate that he is sincere when he talks of promoting freedom, and that he is committed to it regardless of other considerations. If, on the other hand, he soft-pedals in relation to Egypt, it will merely confirm the long-held suspicions that "freedom" is just another weapon to be used selectively in pursuit of Washington's own interests.

... the potential for democracy to take root there is also rather better than in Iraq or even Lebanon.

... the sense of shared nationhood is stronger among Egyptians than it is among Iraqis or the Lebanese. Egypt has a parliamentary system of sorts and, unlike Iraq and Lebanon, its politics is not driven by ethnicity, sectarianism or tribalism. Besides that, it has home grown opposition and reform movements, so there's no need to import them from outside.

... what the US can do to support change without being counter-productive ... Direct financial help from the US government for opposition groups ... counter-productive category, but the US has leverage in other ways, particularly through aid to the Mubarak regime worth $2bn a year.

... a free trade agreement with the US ... can serve as a carrot and a stick, too.

... a "fear barrier"...

... The US has a vital role in that so long as it behaves sensitively, but support from other countries is vital too, to show that the only interests at stake are those of the Egyptian people. '

... It is ... not just a question of leadership but also of the increasingly cantankerous popular mood.

... EU governments appear to believe member states are moving forward in convoy towards agreed goals and that leaders will pull along any laggards. That may have been how European integration worked before but right now it looks like a chimera. In France, Italy and Germany - for instance, three economies with identified structural rigidities and under different kinds of management - the public answer to the pain-before-gain formula is a collective raspberry.

... It was always going to be the case that embracing a populous, poor and mainly Muslim country was going to be highly contentious, especially since the EU has not yet even begun to digest last year's biggest ever enlargement. With the Union and several leading member states in disarray, and undercurrents of hostility to Turkish entry surfacing in German and French politics, Ankara may well be left wondering what club it is joining.

Europe's political elite sometimes seems like those Bourbon kings who learned nothing and forgot nothing. It still believes the secret of EU integration is smart drafting of laws and treaties, mostly behind closed doors, and timely if unseemly horse-trading (ditto). That formula needed high levels of popular confidence in political leaderships - definitely not the case now. '

... a range of scenarios

... the consequences of a French No are impossible to predict with certainty since much would depend on the scale of the rejection and also what politicians in France and around Europe said immediately after the result was announced.

Scenario A: French No, Dutch No.

It would be extremely hard to salvage the treaty after a double rejection ... the ratification process in other member states - including Britain - could be formally halted ...

... Less controversial parts of the treaty - such as plans to create a new EU foreign minister and full-time president of the European Council - might be salvaged at a later date, but the EU would be forced to continue under its old treaty rules.

... a rejection by France could put the brakes on future liberal economic reforms in Europe and future enlargements - including the start of membership talks with Turkey in October

A period of stagnation could follow and important decisions, such as the approval of the next seven-year EU budget and work to liberalise the services sector in Europe could be put on hold. A mooted Franco- German plan to "relaunch" the EU with more social and economic co-ordination could split the union.

Scenario B: French No, Dutch Yes. Denis MacShane, Britain's former Europe minister, wrote a memo to Mr Blair claiming a French No alone would mean "the treaty ratification timetable will be dead". But that is by no means certain. As one veteran EU diplomat explained: "Everything would depend on what President Chirac says in the hours after the vote."

If Mr Chirac left open the possibility of France re-running the vote after a period of reflection, then the pressure would be on other member states, including the UK, to continue ratifying.

... "Anything else would be undemocratic," says Nicolas Schmit, Luxembourg's minister for Europe. "One country can't decide for everyone else."

But if Mr Chirac took the No vote as a decisive rejection and a sign that Europe should start afresh, that would create a different dynamic.

There is no appetite in Europe for a renegotiation of the treaty with France, especially if Paris demanded - in Mr MacShane's words - a more "protectionist, illiberal and anti-business" Europe.

If Mr Chirac indicated he had no intention of asking his country to vote again ... Mr Blair would probably argue that France had killed the treaty, leaving him no option but to cancel the UK referendum.

Scenario C: French Yes, Dutch No

Regarded by some in Brussels as the most likely outcome.... the Dutch would be asked to vote again ...

... the EU elite thinks such a re-run is politically more feasible in a small country than in a big one.

The second referendum would probably happen after all other countries had finished their own ratifications, which must be completed by next November.

Scenario D: French Yes, Dutch Yes.

... Difficult referendums follow in Britain, Denmark and the Czech Republic, but the odds would be on the treaty coming into force one way or another.

Since Britain and Denmark are not deemed to be full members of the club - both have opt-outs from key EU policies including the euro - either country might be asked to stand aside if they cannot ratify.

As for the Czechs, they only joined the EU last May. "If they don't vote Yes, they will probably be asked to leave," said one EU official. '

... "an opening to the south -- India, Asia, Africa -- is overdue. Germany's aspirations have to be seen in the context of its contribution politically and economically." Germany is said to be the third largest net contributor to the United Nations after the United States and Japan, and recently upped its support for Third World countries through the United Nations.

... distinct lack of enthusiasm in the Bush administration to support Germany's inclusion.

... German sources in Washington say they expect that the U.N. General Assembly will vote on the issue of enlargement, and then has a second secret ballot on the candidates. ... a two-thirds majority would be required in the first instance. "If you have 128 member countries voting for the reform, the Security Council will find it hard to oppose it," ... Berlin is pushing for a vote in four to six weeks on a framework resolution to start the process of enlargement.

Few Germans want to think the unthinkable, namely that Washington will block Germany after all. Those that do argue that if that happens a defeated Germany may have to quit the United Nations. '

... a three-pronged strategy to keep the Union focused and forward-looking. First, the EU would remain committed to current priorities: agreeing on a budget settlement, starting membership talks with Turkey and Croatia, developing closer ties with near neighbours, pressing ahead with economic reform (including the services directive) and concluding the Doha trade round.

... Second, the governments would implement some of the treaty's foreign policy provisions.

...Third, the governments would announce a pause before returning to the question of amending the existing EU treaties. After, say, a year reflecting on the treaties' strengths and weaknesses, they would gather for a "mini inter-governmental conference" that would decide on just a handful of amendments. This would give the governments a chance to save key provisions of the constitutional treaty, such as the "double majority" voting rules (simpler and fairer than the current rules), the creation of the post of EU president or the cut in the number of commissioners.

... the EU as a whole cannot take major steps towards a more united Europe unless it can convince electorates to support them. '

... I fully subscribe to the view that currency markets lead a life of their own, more often than not divorced from economic fundamentals. Exchange rates tend to move around a lot in the absence of any discernible fundamental ‘news’ — commonly referred to as ‘excess volatility’. Conversely, exchange rates often fail to respond, or even respond perversely, to what is traditionally considered important ‘news’. In short, foreign exchange markets have an amazing ability to prove most people wrong most of the time. This is what makes them the most fascinating and humbling of all markets to me.

... Put simply, while fundamentals are not at the root of most exchange rate movements, they frequently serve as a scapegoat. Market participants and observes use fundamentals to justify ex post exchange rate moves that have occurred for whatever unobservable reason

... Here’s my laundry list of seven reasons, or seven scapegoats, why the euro should and will fall against the dollar.

1) The euro is expensive ...

2) European growth continues to underperform ...

3) Interest rate differentials should benefit the dollar ...

4) The ECB’s credibility is eroding ...

5) Fiscal deficits on the rise in Europe, declining in the US ...

6) Europe is heading into a political crisis ...

7) A rise in global risk aversion will favor the dollar... '

... How will an enlarged EU function? Where are the borders of Europe as enlargement proceeds quickly?

... immigration--whether the Europeans will do a better job of integrating Muslim immigrants into the social mainstream and at what cost economically and socially.

... future of the welfare state and the social safety net, with the unions-- the traditional leftists--beginning to fight back harder against regulation.

... a geopolitical debate underway on whether Europeans should continue to look to America as a partner on global affairs or set out on their own course and look to the EU as a new global actor.

... The main change is that qualified majority voting would pass when you have 55 percent of the nations representing at least 65 percent of Europe's population voting yes. ... justice and home affairs--will now be subject to qualified majority voting rather than require unanimity. Only two areas will still require unanimity: foreign and defense policy, and tax policy. .... institutional centralization. There would be ... a president of the European Council ... a single foreign minister... European diplomatic service.

... The French have historically favored a Europe that is strong externally, but relatively weak internally. That is to say, in which the nation-state is the primary engine of political power. We are, to some extent, witnessing this struggle over how supra-national the Union should become.

... a time of subtle re-nationalization of political life across Europe.

... the question of how multi-ethnicity can be encouraged. How can communities that are essentially segregated be integrated? How can greater tolerance be promoted within the immigrant communities and within the dominant communities?

... Atlanticists. Britain, Holland, Denmark, Spain, and Italy. They tend to be the countries that are either bordering the Atlantic or have large communities in the United States and that fear domination within the EU by France and Germany.

... Should there be a renegotiation of the treaty if there is one or more "no" votes? ... very complicated and dangerous.

The third issue would be: Could there be a decision to move ahead even though one or more members votes "no"?

... The final option .... the most likely ... informal groups within the EU move ahead on their own. .... go ahead with a foreign minister or diplomatic corps with a grouping of core states and continue to rely on the existing sets of treaties as the foundation for the Union.

... The results are "still very much up in the air. "If I had to bet money, I would bet that it would pass in France. I'm slightly less confident about the Netherlands."'

... (transatlantic relations) The rhetoric has improved. The style on both sides has improved. But if one looks at substance, I think there are still numerous areas of disagreement and potential crises looming over the horizon, Iran being most prominent among them.

The United States has backed the European negotiating position and the Europeans have said, "If Iran does not play ball, we will take them to the U.N. Security Council." In the first instance, that means going to the board at the IAEA, and then the IAEA would refer the issue to the Security Council. I don't think there would be a great deal of disagreement about that. I do think that from there on, Europeans and Americans may head in different directions. Should there be sanctions? If so, what kind? What sorts of options are on the table in the military realm? I hear little agreement ... on this rather unpleasant issue of what to do if Iran does not cease its effort to develop its military nuclear potential.

...is a future for NATO, but it will be a future that doesn't look like the past. The NATO that is evolving is one in which it will continue to act as an irreplaceable institution for the coordination of military operations, such as in the Balkans or Afghanistan, but not as an institution that serves as a forum for transatlantic debate. Too much of what Americans and Europeans need to talk about today is not on NATO's agenda. For example, the potential lifting of the EU arms embargo on China, the question of the euro-dollar exchange rate, and supporting democracy in the Middle East. These are issues that are at the top of the transatlantic agenda, but not on NATO's agenda.

... Serbia's notion of "more than autonomy, but less than independence" is vague, and simply won't be accepted by Kosovo's majority Albanians.

... Partition is also being talked about. But while Kosovo's north is largely Serb, many Serbs are scattered in the south, and it's hard to imagine them accepting such a deal. That leaves independence, with all its risks and complications. Risks, because the Albanians so far have a poor record in their treatment of Serb and other minorities. And complications, because of the issues independence raises not only for Serbia - loath to give up more territory of the former Yugoslavia - but also for Kosovo's neighbors, which have large ethnic Albanian populations. Further afield is the precedent that might be set for other secessionist movements in (other) countries such as Moldova, Georgia, and Azerbaijan if the West helps create an independent Kosovo (which was never a state or republic). But how to persuade Serbia to give up Kosovo? One, it must be promised eventual integration with the world of democratic nations, including the European Union and NATO. And two, it must receive guarantees of protection for the Serb minority in Kosovo.

Kosovo has made some progress, but it has so far failed to live up to UN-endorsed "standards" of a multi- ethnic society.

.. Through negotiations, limits that would calm Serb fears... (Kosovo) should not, for instance, be allowed to later join with Albania. Its higher courts - which would guarantee minority rights - might include internationally appointed judges for a time. And it will probably have to work out a long-term deal with NATO.

... Saving Kosovo was a necessary step in 1999. So is setting it free today. '

... One big message - France must modernise - sits alongside a disdain for the traditional boundaries of right and left in shaping policy. Bill Clinton called it triangulation, Mr Blair the Third Way.

... ruling establishment distinctly uncomfortable with this brilliant interloper.

... Most people think that, win or lose on May 29, Mr Sarkozy will emerge well from the referendum. He has campaigned vigorously for ratification, but has also skilfully (unscrupulously?) balanced support for the treaty with outright opposition to Turkey's eventual EU entry. Is he a visionary or an opportunist?

... There are half a dozen reasons why French voters might reject the constitution. A perceived dilution of French influence within the EU as a result of enlargement, hostility to Turkish membership and Mr Chirac's domestic unpopularity are prominent. Underlying everything, though, is the dispute about how far and how fast France adapts to globalisation.

... That said, the referendum has crystallised the debate about whether France can preserve its present model of social protection. Brussels is cast by the No side as a bastion of ultra-liberalists, the constitution as a victory for the champions of market societies.

... likely that Mr Sarkozy's gospel of modernisation - why should not France prosper from globalisation? - would continue to collide with Mr Chirac's Gaullist nostalgia.

... France's malaise is far from unique. Mr Blair has never really confronted Britain's nightmares about fiendish European plots. Germany is at once more assertive in its foreign policy and angst-ridden at home. Missing in all three countries is the confidence among politicians to balance the anxieties and insecurities of electorates.'

Mr Blair enjoys this opportunity because of a coincidence of events whose connections he is surely unaware of. The one he certainly knows about is his impending chairmanship of the G7 economic summit in Scotland in July. The second is the threat to jobs in America and Europe posed by Asian competition. The third is the protectionist backlash that this Asian competition has triggered in the US and Europe. The fourth is the link between protectionism and the misalignment of currencies, especially in Asia. The fifth, which Mr Blair can scarcely have noticed, is Tuesday’s US Treasury report on currency management, in which the Bush Administration effectively presented the Chinese Government with a six-month ultimatum to revalue its exchange rate or face a trade war. The sixth event, of which I am sure the Prime Minister is blissfully unaware, is an unpublicised bureaucratic gathering in London today and tomorrow of the G7 finance deputies, known as the sherpas, since their job is to prepare the agenda for the summits of G7 finance ministers and heads of government in June and July.

The connection between all these events is the fact that the G7 summit, effectively the directors’ meeting of the global monetary system, gives Mr Blair a once-in-a-lifetime opportunity to act as an honest broker in all the currency and trade disputes between Asia and the West.

Britain is uniquely qualified to mediate in these issues because of its financial and diplomatic expertise, because it is trusted by the United States and because it has been directly threatened by Asian competition, more than any other Western country.

Moreover, the best way to avert a looming confrontation between the United States and China, and more generally between West and East, would be to use all the hallmark techniques of Blairite politics — compromise, triangulation and the balancing of “rights and responsibilities” ...

... The solution would be to bring China into the G7. In exchange for the right to be recognised as an equal partner by today’s G7 — the US, Japan, Germany, Britain, France, Italy and Canada — China would be asked to accept the responsibilities that go with full membership of the global monetary system, above all full co-operation in the management of a global system of floating exchange rates. This is the sort of quid pro quo that the Chinese would probably find acceptable, to judge by the precedent set when China negotiated its admission to the World Trade Organisation.

... China is now the sixth largest economy in the world (just ahead of Italy) in terms of total output, the fourth largest trader (after America, Germany and Japan) and the second largest owner of international currencies (after Japan). Without China, the G7 can scarcely claim any longer to be the world’s economic and monetary directorate.

The present associate status ... is not just politically humiliating but dysfunctional. China is now a key player in all the currency and financial issues which the G7 created to manage. For today’s G7 members to discuss global trade imbalances or currency movements without a Chinese minister in the room is simply a waste of time. '

... Only a small minority of Basque people back Eta's demands for a separate state

... Plenty more, however, want the Basque country to have even more independence from Madrid than the already considerable amount it currently enjoys.

There are similar demands from Catalonia, which wants more control over its own affairs. Several other of the 17 "autonomous regions" that Spain was first divided into more than 20 years ago are also seeking greater self-rule.

"It is Zapatero's task to begin a debate in which, once and for all, we lose our fear of words and look directly at the question of a federal state," (former editor of El Pais) said. "Something that - sooner or later - must work for Europe, should also work for our country."

That is something many Socialists in Catalonia and the Basque country agree with, but that few other Spaniards have seriously contemplated.

Would federalism satisfy Catalans and Basques?

...Opinion polls show that around a third of Basques might vote to split from Spain if there was a referendum. Another third favour federalism.

... But centrists - on both the right and the left - worry that awarding the Basques the right to self-determination would be the start of a slow disintegration of Spain as first one bit, and then another, falls away. '

... What worked for Athens may work for Ankara. Romania and Bulgaria will be in by the end of the decade. Can it then be argued that Bucharest is "more European" than, say, Belgrade?

The looming crisis over the constitution, the cantankerous mood in western Europe and the wealthy traditional members' increasing reluctance to bankroll the EU all suggest a period of paralysis and conflict that will slow down if not ultimately halt the inexorable growth of the union. '

...More democracy is needed in the enlargement process. Before Britain - in its capacity as president of the EU - opens negotiations with Turkey in October, European leaders need to understand that many European citizens do not share their strategic view and do not want to have a common border with Iraq. The worst outcome would be for the Union to pursue negotiations with Turkey, only to fail to win the support of EU citizens for Turkish membership. As the French referendum is proving, the EU can no longer regard enlargement as "business as usual".

... the British think they are "chauvinists, stubborn, nannied and humourless". Even the tolerant Swedes admit to finding them "disobedient, immoral, disorganised, neo-colonialist and dirty". '

The Germans find them "pretentious, haughty and frivolous", the Spanish see them as "cold, distant, vain and impolite". and the Dutch describe them as "agitated, talkative and shallow".

... The Portuguese find them too preachy, the Italians think they are "snobbish, arrogant, carnal, righteous and self-obsessed", and the Greeks dismiss them as "out-of-touch, egocentric bons vivants".

Secondly, though the general picture is miserable, there are New Europe rays of light. Britain, Finland, Ireland and Sweden all, on some measures, have outperformed America. Europe has left America in the dust when it comes to the adoption of wireless technology. Germany is the world's biggest exporter.

The most important ray of light is that Europe's weaknesses have little to do with the macro-economy. The euro enjoys as much confidence as the almighty dollar (a miracle!). And the European welfare state can work. Some of the countries with the biggest welfare systems — notably in Scandinavia — have actually done best. '

... Uncertainty about the future runs deep in France. Burning questions go unresolved. How, for instance, should the country integrate, assimilate or even accommodate its large and growing population of Muslim immigrants? How can France reform its educational system so that what students learn prepares them for the gritty combat of the global marketplace? How will older people survive when their pensions finally are cut back because there just isn't enough money to fund them? Where is France really supposed to fit in this new Europe of 25 countries? And where will Europe fit into the world? '