This paper gives an overview of the causes of the European debt crisis and the consequences for the external relations. It finds that political mishandling has increased uncertainty, which has contributed to a tendency for the euro to become weaker.

France and Germany have been the motor of European integration for half a century. During this process their economies have converged to a remarkable degree. Their present difficulties in terms of economic growth, unemployment and public debt are shown to depend largely on fallacies of...