“The effort to bind states together may lead, instead, to a huge increase in frictions among them. If so, the event would meet the classical definition of tragedy: hubris (arrogance); Ate (folly); nemesis (destruction).” Thus, in December 1991, did I conclude an article on the rush to monetary union. I am aware of the commitment of Europe's elite to the success of the European project. But the crisis is profound – for the eurozone, the European Union and the world. As Wolfgang Münchau has pointed out, last week's European Council was not a solution but a fudge.

The immediate challenge is Greece. On this, the heads of government decided that “as part of a package involving substantial International Monetary Fund financing and a majority of European financing, euro area member states are ready to contribute to co-ordinated bilateral loans.” But, it continued: “Any disbursement . . . would be decided by the euro member states by unanimity subject to strong conditionality and based on an assessment by the European Commission and the European Central Bank . . . The objective of this mechanism will not be to provide financing at average euro area interest rates, but to set incentives to return to market financing as soon as possibly . . . ”

Germany, the most powerful eurozone member, got its way. But the outcome was unpopular elsewhere, not least in France, and with the ECB, which does not want the fund to intervene in monetary policy. Nicolas Sarkozy, the French president, must look with horror on intervention by a Washington-based institution headed by Dominique Strauss-Kahn, a heavyweight potential rival for his job.