Liam Dann: It needn't have come to this

The EU did what Napoleon could not, but that connectivity has spread local economic failure to the whole. Photo / AP

Remember that old joke about Europe? In heaven the chefs are French, the police are British, the engineers are German, the lovers are Italian, and everything is organised by the Swiss.

In hell the chefs are British, the police are German, the engineers are French, the lovers are Swiss and everything is organised by the Italians.

Back in the 1990s they used to put it on T-shirts and it was funny because it didn't matter: The new Europe was a beacon of political and economic success.

Small details aside (the Swiss have never been part of the European Union), the joke is a little too close to the bone these days.

It paints a nightmare scenario where the cultural differences between the European nations combine to create chaos rather than order.

That scenario has played out in Europe through thousands of years of warfare. So what a triumph it was to create a unified region stretching from the islands of eastern Greece to the western shores of Ireland and Portugal - a feat never achieved by all the armies of the Caesars, Napoleon or Hitler.

It's one of the great shames of this slow-motion train wreck of a financial crisis which now threatens the EU.

The dream is not yet over but it's tarnished and the prospects for further expansion - into Eastern Europe and Turkey - look remote. In fact this week the major powers have had to start talking openly about retreat, for the eurozone at least.

The other great shame is that Europe looks set to drag the rest of the world down with it. Down to what? We don't know yet - maybe another recession, a slower growth path almost certainly.

There is evidence that the German economy is slowing and on Thursday there was news that the growth of exports is now slower than it's been for more than two years.

That connectivity of the European Union, so inspiring in the good times, now presents us with a chain reaction of economic doom: from Greece to Italy, Europe to Asia. And from Asia to Australia and your doorstep.

Without the wonders of the eurozone, the economic failure of a country like Greece would have been all but meaningless on this side of the world.

With so much at stake the events in Europe have made for a sickening spectacle.

All the more so because the failure of leaders to deal decisively with the issues represents failure of the political process and democracy.

The 2008 crisis had its warning signs but apart from a handful of doomsayers most were surprised by the scale of the collapse.

What makes the European crisis so galling is that it has been playing out almost as if to a script. Since the days of the Lehman collapse, commentators and economists have been pointing out how vulnerable Europe is on sovereign debt.

Each successive bailout has been greeted with scepticism and calls to address the structural issues facing the region.

Only this week, with the inevitable Italian crisis, have the Germans and French been forced to acknowledge that the eurozone may not be sustainable in its present form.

It should not have come to this. We are three years on from Lehman Brothers, four years on from the first signs of the credit crunch.

To be confronting just now the prospect of deep austerity measures is ridiculous. Austerity opponents rightly point out that these measures are recessionary and will set economic growth back for years to come.

But how is it that nations like Greece and Italy - and Britain for that matter - should need to be making such sudden and deep cuts to spending?

We have austerity in 2011 because people and politicians would not acknowledge the need for prudence in 2007 or thrift in 2009.

It's a salutary lesson for nations like New Zealand that still have some time up their sleeves.

How much time is not clear.

After all, as we have seen over the past few years, it might be wise to assume that we have less time rather than more.

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