A 21st-century war in Europe is no longer unthinkable. After weeks of speculation about whether Russia will invade Ukraine, a clear majority of respondents in a recent pan-European poll by the European Council on Foreign Relations think that a war is likely and that Europe should respond.

Different countries are driven by different fears, partly depending on their own recent experiences. In Poland, which has been dealing with Belarus’s attempts to funnel Middle Eastern migrants across its border, there are heightened fears of new refugee waves. In France and Sweden, cyberattacks are the primary concern, reflecting Russia’s recent interference in their national elections. And for Germans, Italians and Romanians, energy shortages are the biggest fear.

But more is at stake than Europeans’ differing perceptions of external threats. The great German strategist Carl von Clausewitz famously described war as the continuation of politics by other means, and in the early weeks of the Ukraine crisis, how countries responded to the threat of war spoke volumes about their domestic politics.

Consider the United Kingdom. Many suspect that Prime Minister Boris Johnson’s sudden interest in Eastern Europe has less to do with his concern for Ukraine than with his desire to divert attention from the revelations that his office held parties at Downing Street while the rest of the country was in lockdown. Beyond that, the crisis also may present an opportunity for him to demonstrate to the United States that post-Brexit Britain still matters.

As for US President Joe Biden, his number one goal is to minimise the resources and time needed to deal with the crisis. His mission, upon assuming office, was to deliver policies that would benefit the middle class and shift the focus of US foreign policy to the Indo-Pacific and the challenge posed by China. With former president Donald Trump threatening to return to power, it’s not just America’s policy towards Ukraine and Russia that’s at stake. So, too, is the future of American democracy.

America’s position is of great concern to Eastern and Central Europeans. They are increasingly anxious about America’s deteriorating politics and questionable resolve in the face of Russian aggression. Their biggest fear is that if Russian tanks are allowed to roll into Ukraine, their next destination could be Tallinn, Riga or even Warsaw.

Meanwhile, countries like Germany, Italy, Austria and Greece fear that a conflict over Ukraine will close off the possibility of establishing a more normal relationship with Russia. Germany is torn between its Western values, its solidarity with fellow Central and Eastern Europeans, and its postwar pacifist tradition. Hence, Chancellor Olaf Scholz has reassured other Western leaders that Germany will be a solid ally in the case of war, while also signalling that it will avoid taking a leadership role in any common European response.

Scholz’s position stands in stark contrast to that of French President Emmanuel Macron, who sees the crisis as an opportunity to demonstrate European ‘strategic autonomy’, a policy goal that he has pursued since the start of his presidency. Of course, by assuming a visible leadership role in resolving the Ukraine crisis, Macron also can burnish his image in the run-up to France’s presidential election this spring.

With its member countries divided by geography and history, the European Union has often struggled to write itself into the story. Generally appearing passive, weak and immobile, the stereotype is that it is unwilling to either defend or revise the existing security order. Critics regard it as being paralysed by the prospect of two nightmare scenarios: an all-out war or some Yalta 2.0 scenario in which Russia and America broker a new settlement for Europe without bothering to consult Europeans.

But underlying the obvious differences are key interests that all Europeans share: the desire to prevent another war in Europe, the need to preserve NATO’s credibility and a sense of responsibility to save Ukraine from being forced back under a Russian yoke. The genius of European policymaking is its ability to reconcile domestic political imperatives with the need for international diplomacy. The European Council on Foreign Relations poll shows that, over the last few weeks, there has been a convergence among European polities about the need to respond.

At the same time, European governments are finding better ways to manage their own divisions. Though many Central and Eastern Europeans are uncomfortable about diplomatic talks, they have not sought to prevent the Americans or Macron from exploring options for engagement with Russia. And for his part, Macron has been careful to consult other countries and to stick to agreed principles concerning European security and Ukrainian sovereignty.

After initial hesitations and silence, Germany has signalled that it is willing to put all sanctions on the table. And as one EU foreign minister confided to me recently, even Hungarian Prime Minister Viktor Orban mostly stuck to the common EU line when he met with Russian President Vladimir Putin earlier this month.

The fact that war is no longer unthinkable in Europe could force Europeans to make tricky compromises to preserve their collective peace. Though it certainly wasn’t his goal when he started massing troops on the Ukrainian border, Putin may unwittingly have helped EU member states transform themselves from a fragmented assemblage of apprehensive observers into a bloc of determined defenders of their own security.

Italian Prime Minister Mario Draghi and French President Emmanuel Macron are on track to sign a bilateral accord—named the Quirinale Treaty after the Roman palace—designed to boost their countries’ industrial and strategic cooperation. But this new Paris–Rome power axis may do much more than that as it may very well alter the leadership dynamic within the entire European Union.

This emerging Draghi–Macron alliance may seem like an odd pairing, because some French look down their noses at Italians. I personally witnessed quite a lot of this when I lived in Aix-en-Provence, a place where the French and Italian cultures often compete and clash. But judging the Italians harshly for their politics is much harder to do now that the supremely competent and experienced Draghi is in charge.

A mere 10 months after taking office, Draghi has emerged as one of Europe’s most highly regarded and influential politicians. Just before last month’s G20 summit in Rome, he held a private meeting with US President Joe Biden—a tête-à-tête that testifies to his elevated standing in the transatlantic alliance. According to the New York Times, Biden made clear that ‘Italy and the United States needed to show that democracies can function successfully and that Mr. Draghi was doing that.’

But Draghi is not only showing the world that Italy can function like other rich, modern countries. The staunchly pro-European, pro-American and pro-NATO prime minister has also made savvy political moves that could change the face of Europe and the EU. For starters, he has forged a deep bond with Macron. Working together, the two leaders have an excellent opportunity to wield more influence over EU policy—from the economy to defence—now that Angela Merkel is stepping down as German chancellor after 16 years in power. The Quirinale Treaty is a concrete result of their new cooperation to fill the gap created by Merkel’s departure.

If they succeed, the locus of influence in the EU will shift southward—and towards greater European integration. Here, Draghi and Macron see eye to eye, including on the critical issue of European defence. Both are confident in the EU’s ability to act independently as a military force while still maintaining its full commitment to NATO.

Biden himself appears to accept this view. According to the Times, ‘Mr. Biden told Mr. Draghi [during their October meeting] that he viewed a strong European Union—even one with a unified military defence—as in the interest of the United States.’ Given America’s growing focus on the Asia–Pacific theatre, a unified European defence capability is exactly what the US needs.

With China becoming increasingly belligerent under President Xi Jinping, a European defence force could fill in the strategic gaps created by NATO’s own efforts to reorient itself towards Asia. It is wrong to argue that America is turning its back on Europe with its pivot to Asia. Supporting greater military independence for Europe means that NATO will be freed up to focus on China, which poses as much of a military threat to Europe as it does to the US.

In any case, the Biden administration’s tacit support for a unified European defence force will give Draghi and Macron additional ammunition to promote the idea. Given the possibility of strong opposition from Germany and some Central European countries, it is hardly a fait accompli.

Adding to the potential of the Draghi–Macron alignment is the fact that the incoming German government may be far more sympathetic to their worldview than Merkel ever was. Instead of ‘Frau Nein’ objecting to most initiatives designed to deepen EU integration, they will encounter a genial ‘Herr Maybe’ in her successor. Although the new chancellor, Olaf Scholz of the Social Democrats, will need to be convinced of the benefits of change, particularly deeper integration, he will not immediately reject new ideas out of hand, as has mostly been the case for the past 16 years under Merkel. Scholz will also be working with coalition partners who are much more open to integration (though the Free Democrats remain sceptical of greater financial integration).

A three-party German coalition government comprising the Social Democrats, the Greens and the Free Democrats could turn out to be a boon for the European project, and not only with respect to defence policy. On issues ranging from fiscal and monetary union to eurobonds, China, and Russia, Draghi and Macron will no longer be banging their heads against a closed door.

A significant acceleration of European integration may well be in the cards. Such a development could not come soon enough, given Donald Trump’s possible return to the White House in 2025. Just the thought of that prospect should scare the daylights out of most Europeans, impelling ever-faster integration, whatever the obstacles. Who could blame them?

With two decades of war in Afghanistan coming to the grimmest of possible ends, it is worth remembering that three decades have now passed since war came to the Balkans. Both are case studies in how the mismanagement of war can have devastating effects that linger for decades.

In the Balkans, a small war between the disintegrating state of Yugoslavia and one of its constitutive republics, Slovenia, was followed by a bigger conflict in Croatia. Within a year, a savage conflict was raging in Bosnia and Herzegovina as well. Suddenly, Europe’s ‘post-war’ period had ended.

The Balkan wars raged for a decade. The Dayton Peace Agreement ended the conflict in Bosnia in 1995, but then came the Kosovo War, which continued until 1999 and was followed, in 2001, by a serious outbreak of violence in what is now North Macedonia.

All told, the Balkan wars claimed more than 100,000 lives, displaced millions of people and set back the region’s economic and social development by decades. Though it had been living largely on credit, the old Yugoslavia had given its citizens a better standard of living than those of its socialist peers. The country’s long, violent disintegration changed all that.

The peace agreements that were cobbled together at the time were merely stopgap measures. Everyone understood that lasting stability would require a wider and much more comprehensive framework. And so, in 2003, European Union leaders declared that all the region’s countries should work towards a future of stability and lasting peace within the EU.

No one expected that to happen overnight; but nor did anyone think the integration process would be as drawn out as it has been. Since Slovenia and Croatia’s accession in 2004 and 2013, respectively, the EU’s Balkan enlargement has effectively stalled.

The reason for this is twofold. First, political and economic reform in non-EU Balkan countries has been painfully slow, while corruption and nationalist sentiment has become ever more entrenched. Second, support for further enlargement has faded within many EU countries. Though politicians still pay lip service to the idea, new hurdles and delays tend to be greeted with relief in several key member states.

Moreover, the problems within Balkan countries are severe. A quarter of a century after the Dayton Agreement, the international community has deemed Bosnia to be so politically dysfunctional as to warrant a new high representative with wide-ranging powers (I was the first to hold such an office, serving from 1995 to 1997), effectively derailing the country’s EU-accession agenda.

Meanwhile, Serbia has come under the boot of an autocratic regime that flirts with China one day and kowtows to Russia the next, all while its representatives continue to put on a good face at the European Commission in Brussels. Despite enormous efforts by both the EU and the United States, the outstanding issues between Serbia and Kosovo are nowhere close to being resolved.

Finally, after being blocked from joining the EU by Greece (owing to a dispute over its name), North Macedonia now finds itself being blackballed by Bulgaria for reasons that go far back in the region’s history (but that lack any contemporary relevance).

Further complicating matters, the EU’s struggle to rein in the Hungarian and Polish governments’ attacks on the rule of law and independent media has dampened its appetite for taking a risk with potentially illiberal new members. When Hungary offers its enthusiastic support for Serbia’s accession bid, many others in the EU see a hidden agenda that must be blocked.

The EU’s overture in 2003 was a courageous and wise strategic step. But now that the prospect of Balkan integration is fading, the charade cannot continue. Instead, political leaders must accept reality and start mapping out realistic interim steps that could improve conditions in the region without abandoning the final goal.

A good starting point is the Open Balkan initiative, which was designed to increase trade between Albania, North Macedonia and Serbia. But it’s not enough. The EU should take the lead by proposing a new arrangement, one that includes an offer of membership in its customs union and single market.

Three decades ago, the Balkan wars started with a small 10-day conflict on Slovenia’s borders. Now, it’s Slovenia that holds the Council of the European Union’s rotating chairmanship. Its leadership agenda includes a summit between all the Western Balkan countries and EU member states in October. That occasion should prompt clear and realistic thinking from all parties.

The alternative for the Western Balkans is a slide backward into violence. It has happened before. It is happening now in Afghanistan. It must not happen again in Europe.

Covid-19 has wounded almost every developed country, but the truth is that living standards in many of them had been stagnating or declining for years. Many metrics highlight this trend, but perhaps the most telling comes from the OECD, which reports a 4% decline in household median net wealth across its member countries since 2010.

No wonder advanced economies have experienced periodic explosions of anger in recent years—from Donald Trump’s election and the Brexit referendum in 2016 to the gilets jaunes (‘yellow vests’) protests in France and an election in Italy that brought two anti-establishment parties to power. Despite these upheavals, predictions of democratic collapse have not been borne out. On the contrary, the establishment has re-established itself.

Whenever an angry public puts political adventurists in power, it is only a matter of time before they reveal that they have no real solutions to people’s problems. One therefore shouldn’t read too much into failures of ‘populist’ governance. Historically, populists have tended to be more effective from the outside, where they can help to focus mainstream politicians’ minds on questions they would prefer to avoid.

Even during revolutions that appeared to upend all institutions, the chaos often masked an underlying continuity. The French Revolution started two years after Louis XVI’s finance minister, Charles-Alexandre de Calonne, failed to sweep away the privileged classes’ tax exemptions. Looking back 60 years later, Alexis de Tocqueville concluded that the apparent cataclysm of 1789 had in fact changed little about how France was governed.

Culture, it seems, trumps revolution. In Russia, the Bolsheviks seized power with the fanatical millenarian goal of reinventing society, but they ended up governing as a traditional autocracy—albeit with uniquely cruel and murderous methods.

But while revolutions often fail to effect much change, that doesn’t mean we shouldn’t fear them. After all, the human costs are usually high. Even if abrupt institutional change occurs without violence, it is almost certain to harm livelihoods. Democracy’s doomsayers perhaps should be heeded after all, especially in Europe.

Sclerotic governance and chronically depressed living standards have created the conditions for further breakdowns and dislocations. It is no secret that labour-replacing technologies and the globalisation of labour have hollowed out the mid-skilled and salaried jobs that long underpinned living standards and social stability in developed countries. But during the past decade, this problem has been compounded by financial repression, owing to the combination of fiscal austerity and historically low interest rates.

Against this backdrop, the deepening of institutional fault lines in the European Union has created the sense that something must give. Today’s hybrid arrangement of federalism (through the European Central Bank), supranationalism (through the European Commission) and traditional national governance has both strengths and weaknesses. While it seems to reflect most Europeans’ preference for some limited degree of shared governance, it rules out effective policy action.

Consider the EU’s vaccination fiasco. In a show of European solidarity, EU countries agreed to delegate their ‘competence’ in this area to the European Commission. The intention was noble. But the commission was never equipped to run a massive public health procurement program, and national regulators and politicians soon undercut the effort (and public trust) by suspending the AstraZeneca vaccine—thus infringing on the competence of the EU-level regulator (the European Medicines Agency).

Whenever such problems arise, the overwhelming consensus is that Europe should simply muddle through. Rarely is there any willingness to change things, either by creating a genuine European government with the necessary fiscal muscle to reverse the continent’s relative economic underperformance, or by reversing the integration process.

Instead, institutional purgatory makes Europe a poor cousin to its friends and allies. As US interest rates rise on the back of a relatively buoyant economy, the European Central Bank will once again be reduced to a now-familiar position. The flow of capital into higher-yielding dollar instruments will weaken the euro, and Europe will use that depreciation to eke out whatever growth it can by tapping external demand, rather than by materially boosting domestic demand. Even if European citizens prove ready to live with this tired state of affairs, the United States and others cannot be expected to tolerate it forever.

European-level paralysis stands in contrast to politics within EU member states. In France, the political establishment collapsed after decades of failure by successive governments (on the left and the right) to solve several basic problems, not least sky-high unemployment. As a result, the two traditional parties were supplanted in the 2017 election by a single mainstream movement led by Emmanuel Macron, which handily defeated a fragmented array of anti-establishment challengers.

Macron’s victory showed that longstanding blockages are surmountable at the national level. But the new French establishment has since blocked itself by attempting to transcend left and right. Macron’s famous catchphrase ‘en même temps’ (‘at the same time’) has come to sound like an attempt to have everything both ways. A typical example is the impasse on managing Covid-19. Rather than deciding between a robust lockdown and a lighter, Swedish-style approach to social distancing, Macron’s government cobbled together a congeries of curfews and other measures that delivered the worst of both worlds.

A further swing of the pendulum in the next national elections—just over a year away—would redound to the benefit of the main anti-establishment challenger: Marine Le Pen of the far-right National Rally. Recent polls show Macron defeating Le Pen by only a narrow 52% majority (compared to his two-to-one margin in 2017), putting Le Pen within striking distance of the Élysée Palace.

But even if Le Pen were to shock France and the world, her presidency, like previous ‘populist’ interludes, probably would generate more noise than substance. Beyond her own limitations, Europe’s institutional interdependencies would again emerge as the decisive obstacle to change, especially within the monetary union. Europe’s muddling underperformance can and most likely will last for some time to come. But this prospect is as uninspiring as it is ultimately dangerous.

In 2012, European Central Bank President Mario Draghi pulled Europe from the depths of economic crisis with his famous promise to do ‘whatever it takes’ to save the euro. Now, Draghi’s native Italy is hoping he can save it, too, by leading a new unity government. But even for ‘super Mario’, success is far from guaranteed.

Draghi’s skill, competency and credibility are not in question. But the challenge ahead should not be underestimated. Not only has Italy’s long-running economic crisis been compounded by the catastrophic Covid-19 pandemic; the country has been mired in a paralysing political crisis.

If Draghi is to address the Covid-19 emergency effectively, let alone fortify Italy’s economic foundations, he will first have to find a way to navigate the country’s intricate politics. That means, for starters, securing the full support of the anti-establishment Five Star movement (M5S), something he appears to have done.

In Italy’s 2018 general election, the M5S became the largest party in parliament, thanks to its Eurosceptic platform. The party’s leadership even accused Draghi, who left the ECB the following year, of ‘attacking Italy’. While the M5S has softened its stance considerably since then, and pledged its support for the Draghi-led government, it remains deeply divided, and many of its members consider this support as an unpalatable U-turn.

But the M5S is only part of the equation. Draghi’s new government will probably also need the votes of small centrist parties and former Prime Minister Silvio Berlusconi’s Forza Italia, and possibly even Matteo Salvini’s far-right Lega, in order to secure a parliamentary majority. But, even if he can form such an alliance, it will remain unruly and could easily become hostage to the disputes, preferences and whims of its members.

And there is much about which Italy’s political forces could disagree. The Draghi government’s agenda will have to include both short-term emergency interventions and long-term structural reforms—all of which will require significant public spending. The EU’s €750 billion (A$1.17 trillion) Covid-19 recovery fund—from which Italy, one of the countries most affected by the coronavirus, should get some €200 billion (A$312 billion) —has been devised with this in mind.

Draghi has acknowledged that any solution to the Covid-19 economic crisis ‘must involve a significant increase in public debt’. But, for Italy, that increase must be significant indeed.

When the Covid-19 shock arrived, Italy had still not fully recovered from the 2008 global financial crisis. In 2020, the country’s GDP contracted by nearly 9%. Add to that the surge in public spending, aimed at cushioning the blow to businesses and households, and the government’s debt-to-GDP ratio has soared to approximately 155%.

GDP is expected to expand by just over 4% this year. However, once the rebound from last year’s contraction is over, GDP growth will slow significantly. Real output thus appears unlikely to return to pre-pandemic levels—thereby reducing the debt-to-GDP ratio—within the next few years.

According to Draghi, the key to keeping high levels of debt sustainable is to channel public spending towards ‘productive purposes’, such as education and skill formation. But Italy’s political parties may not agree with Draghi’s distinctions between ‘good’ and ‘bad’ debt. There is already widespread disagreement on how to spend the money provided by the EU recovery fund.

More fundamentally, while productive spending is part of the debt-sustainability equation, keeping debt-service costs low is also essential. For that, a functioning government is a necessary, but not sufficient, condition. The politics need to be credible as well.

Draghi’s personal stature will help here—Italy’s stock and bond markets rallied at the mere thought of a Draghi-led government. But no one person can guarantee a country’s ability to meet its debt obligations. And Italy’s dysfunctional politics have consumed many good men (who still dominate the country’s politics) in the last quarter of a century.

If Draghi is to avoid this fate, he must focus on laying the groundwork for Italy’s economic transformation, rather than leading the process. This means setting a time limit on his leadership: no matter how much pressure he faces, he should not remain prime minister past 2022, and perhaps not even that long. In fact, a general election should be called as soon as possible.

There is no recipe for remedying Italy’s political crisis, and no one should expect Draghi to provide one. A technocratic government needs to be effective and short-lived, allowing its legacy to be defined by the work of its successors. This means that Draghi’s focus should be on guiding Italy’s political forces towards sustainable policy decisions.

It also means that those forces must figure out how to engage with one another constructively. That is, after all, the mark of a mature democracy. Attempting simply to suppress some voices, such as those of the Eurosceptics and even fascists, could cause pressure to build, leading to a potentially devastating explosion. Defusing such forces through dialogue and effective governance is the only credible way forward.

Italy’s current crisis, coming at a time when citizens are languishing in lockdown and the much-touted vaccination program has reached less than 5% of the population, has further depleted Italians’ confidence in their political leaders. With deft and bold action, Draghi can go some way to restoring that confidence. But he cannot do it alone.