The paper begins with a brief discussion of three fundamental points of reference: the bargain between Germany and its EU partners when EMU was first agreed: design faults and mismanagement of the system since then and the statement issued by the heads of state and government following the euro area summit of 11 February, in which the no-bail-out clause in the Treaty was modified, albeit on terms which excluded immediate intervention to assist Greece.

The second part of the paper analyses developments between 12 February and 10 May. The two key protagonists in a story which was at times extremely dramatic were the German chancellor, Angela Merkel, and the financial markets. The debate within the German government and between the chancellor and her EU partners between February and May was not about whether Greece’s partners could or should intervene on Greece’s behalf, but about how and on what terms they should do so. As far as Angela Merkel was concerned, intervention could only be justified, legally as well as politically, as ultima ratio, in the last resort. The definition of what this meant and when, still more importantly, the last resort had been reached was Chefssache, or more precisely, the chancellor’s business. Mrs Merkel has always been the leading figure in the politics of the European Council. Her dominance between February and May was nevertheless striking even by her standards. Even she could not however control the markets. The interaction between political time and market time is thus at the heart of the story.

The final section of the paper draws some conclusions. Several are positive. The EU has moved a very long way in the past three months. The political and economic costs have nevertheless been considerable. The principal responsibility for the difficulties that have arisen undoubtedly lie with those who designed the system in the 1990s and managed it during the first ten years. The euro area’s current leaders have in other words been obliged to pay for the past. In coping with these problems however, some of them have been stronger than others. Angela Merkel’s primacy has already been remarked upon. The roles played by Nicolas Sarkozy and Jean-Claude Trichet were also significant however. For Herman Van Rompuy, the past three months have exposed important flaws in the new regime, which hopefully he and his colleagues in the Task Force will address. The principal loser at EU level has however been José Manuel Barroso, whose role was marginal throughout and whose authority has been seriously weakened as a result.

The final pages focus on the future and more particularly on the work of the Van Rompuy Task Force, which ought to play the role in designing the post-crisis system that the Delors Committee played in devising the Maastricht Treaty regime.

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