ABOUT FIFTY YEARS AGO, in 1961, Jean-Paul Sartre complained about the state of Europe. Europe is springing leaks everywhere, he wrote. He went on to remark that it simply is that in the past we made history and now history is being made of us. Sartre was undoubtedly too pessimistic. Many major achievements of great significance have occurred in the last half a century in Europe, since Sartres lament, including the emergence of the European Union, the reunification of Germany, the extension of democracy to Eastern Europe, the consolidation and improvement of national health services and of the welfare state, and the legalization and enforcement of some human rights. All this went with a rapidly expanding European economy, which comprehensively re-built and massively expanded its industrial base and infrastructure, which had been devastated during World War II. There is indeed a long-run historical contrast to which Sartre could have pointed. For centuries preceding World War II, a lot of world history was actually made in Europe. And this generated much admiration, mixed with some fear, around the world. But the situation changed rapidly in the second half of the twentieth century. When I first arrived in Cambridge as a student from India in the early 1950s, I remember asking whether there were any lectures given on the economic history of Asia, Africa, and Latin America. I was told that there were indeed such lecturesand that they were given for a paper called Expansion of Europe. That view of the non-European world would seem a little archaic now, not merely because the grand European empires have ended, but also because the balance of political prominence and economic strength has radically changed in the world. Europe is no longer larger than life. There is, of course, nothing particularly remarkableor lamentablein the changing role of the different regions of the world. This has happened again and again. What is really striking is not the historical re-balancing of the different parts of the world, but the mess that Europe has managed to get into in the last decade or so, particularly over the last couple of years. There is a lot of discussion right nowappropriately enoughabout how Europe is going to liberate itself from its financial disarray, economic misery, and political chaos. What to do now is certainly an important issue today, but what not to do is no less important in looking at Europes immediate past. This is so not just because past mistakes are relevant in deciding on what to do in Europe (even though what has been done cannot be readily undonethere is no automatic translation from past follies into present rectifications), but also because the negative lessons are essential if we are to avoid similar adversities in the rest of the world. SO WHAT HAS GONE WRONG in Europe in recent years? I shall divide my analysis into three broad subjects: the challenge of European unity; the requirements of democracy; and the demands of sound economic policy. These are all related to each other, analytically as well as empirically. The unification of Europe is an old dream. It is not quite as ancient as it is sometimes suggestedthe dream is not of classical antiquity. Alexander and other ancient Greeks were less interested in chatting with Goths, Vikings, Angles, and Saxons than they were in conversing with ancient Iranians, Bactrians, and Indians, and Julius Caesar and Mark Antony identified more readily with ancient Egyptians than with Europeans located to the north of Rome. But Europe went through successive waves of cultural and political integration, greatly helped by the powerful spread of Christianity; and by 1464 King George of Poděbrady in Bohemia was talking about pan-European unity. He was followed by many others in the centuries to come, and by the eighteenth century, even George Washington wrote to the Marquis de La Fayette that one day, on the model of the United States of America, a United States of Europe will come into being. But it was the terrible sequence of the two World Wars in the twentieth century, with its floods of European blood, which firmly established the urgent need for political unity in Europe. As Auden wrote in early 1939, on the eve of World War II: In the nightmare of the dark All the dogs of Europe bark, And the living nations wait, Each sequestered in its hate. The events that followed only confirmed the poets worst expectations. The terrible fear of a repeat of what European countries had seen in the World Wars continued to haunt a great many Europeans. It is important in this context to appreciate that the movement for European unification began as a crusade for political unity, rather than for financial unification and a common currency.