Europe

I'm visiting a stylish but tense Rome today, just as the Italian legislature has voted down a non-confidence vote in Silvio Berlusconi, Italy's mogul-cum-leader. "Rome is at war" my taxi driver told me and numerous demonstrations are going on. Ill Cavaliere, as Berlusconi is sometimes known, put in a strong defence of his record in the Senate and managed to coax, cajole and, some claim, bribe enough parliamentarians in the Chamber of Deputies to secure a small victory. He pulled not a Full Monty but a "Full Andreotti", using every trick and tactic in the book (and some scribbled in the margin too). For now, Berlusconi survives and can resume a life of partying pleasure-seeking and friendship with Vladimir Putin, which caused the political ructions in the first place.

China is doing what it can do to scupper the forthcoming Nobel Peace Prize ceremony in Oslo. Their Foreign Ministry has now said that countries who decided to attend event would be showing disrespect to China: "We hope those countries that have received the invitation can tell right from wrong," the ministry's spokeswoman told journalists. Many of the world's human-rights abusers have been only too happy to oblige, including Pakistan, Iran and so on. They want to keep friendly with China and share Beijing's anti-democratic agenda. But, oddly enough, Serbia, a would-be EU member, is said to have chosen to boycott the Norwegian event. Keen to get Chinese financial assistance and help in its Kosovo policy, Belgrade's thinking is clear.

So far Ireland and Greece have been bailed out with relative ease. If Portugal required external assistance, Europe could run to that too. But bailing out Spain would be another matter entirely. As The New York Times points out today, the Spanish economy is twice as big as the Irish, Greek and Portuguese ones combined. Spain’s situation is not yet critical. But as the NYT piece sets out very clearly, there are some extremely worrying signs. The gap between Spanish and German gilt yields is now at the biggest point it has been since the introduction of the euro. Spanish banks are also heavily exposed to Portuguese debt.

Over the last decade, Wall Street has become an important foreign policy actor in its own right, almost as important as the lobbyists on K-Street and the White House on Pensylvania Avenue. The ebb and flow of capital has been a decisive international force in determining the fate of nations - most recently illustrated in the cases of Greece and Ireland. As an aide to President Clinton once said: in a second life he would like to come back as the bond market. But Wall Street has influenced foreign policy in a deeper way too: by changing the way that successive US administrations see the world. Not by focusing on the bottom-line. International relations cannot be reduced to cost/benefit analyses.

Are we witnessing the start of a very long death scene for the Euro? Asked if the Euro will survive, William Hague replied simply: “who knows?”. The new president, Herman Von Rompuy, has said that the Euro faces an “existential test”. We are looking at the very real prospect of the Euro’s collapse. And that “if we don't survive with the eurozone, we will not survive with the European Union”. This would, by necessity, require a new treaty - and give Britain an unprecedented opportunity to renegotiate its membership on terms the public regard as acceptable. In my News of the World column today, I say (£) that this presents Cameron with what would be the greatest foreign policy opportunity of his premiership.