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Tomas Valasek of the Centre for European Reform, a think tank in London, says opportunities exist for smarter defence spending. Most spending is not for military operations, he says, but for things like training, education and procurement. Four-fifths of European equipment budgets are spent on products from domestic manufacturers, which often don't offer the best value. "There's a shocking contrast between the way we fight together and the way we build our forces in splendid isolation from each other," he says.

Germans feel poorer and more troubled in their own economy it will make them less generous in providing aid, in making full use of the EFSF, in considering things like euro bonds. They will have more worries, be more insecure," said Charles Grant, director of the Centre for European Reform in London.

Philip White, of the London-based Centre for European Reform, explains that EU leaders are torn between meeting the demands of the markets and upholding democratic norms: "The stage we are at in the eurozone crisis presents politicians with a deeply uncomfortable position: trying to convince markets that they are taking the necessary action to place economies on a more sustainable path and that the euro is here to stay while on the other hand to persuade their electorates that they are respecting democratic traditions." "If you look at the debt and deficit numbe

Simon Tilford, chief economist at the Centre for European Reform (CER) in London, called it "a positive step that this debate is taking place in Germany and that there is an acceptance that pooling fiscal authority is a necessary precondition of a lasting conclusion of the crisis." "But there is a risk," he added pointedly, “that in order to sell this to domestic opinion, Germany will extract concessions that will render the whole thing unworkable." ...Europe still hasn’t resolved the fundamental question it skirted back in 1996 at Dublin Castle: Is the euro mor

"It's imperfect [the eurobond] and it would be difficult," says Simon Tilford of the Centre for European Reform, a London think tank. "But it's much less destructive, economically and politically," than watching the euro collapse, he says.

"Sanctions on the energy sector would be an obvious next step," Clara O'Donnell, of the Centre for European Reform, said. "But if there were a real interest to do that, it would probably have gone further already - the level of violence the Syrian authorities have been inflicting has been quite prolonged now and it's striking to see how slow the exploration of widening sanctions has been. Clearly, the desire of European policy makers not to damage the economic interests of some firm may be a playing a role."

"There's real fear that, given the mounting challenges facing the administration and the standoff in Congress, this could really weaken US influence and the US role in the world," says Simon Tilford, chief economist at the Centre for European Reform in London. "For most Europeans, that's not a prospect they welcome." ...If they are left holding paper of diminished value, they have only themselves to blame, argues Tilford, the economist at the Centre for European Reform. China bought U.S.

Simon Tilford, the chief economist at the Centre for European Reform think-tank, warned the EU was suffering a backlash from citizens and politicians worried about issues for which it stands, such as economic liberalism and movement across borders. "The EU can only work if the national governments let it work." He said he had "pressing concerns" over the Commission's effectiveness as more member-states entered into deals with individual governments rather than operating through the Commission.