In the soft spring sunshine it was possible to believe the Brussels briefings that Europe was finally getting on top of the crisis in the eurozone. But a shadow fell across the summit.

It was not just the fact that Portugal was edging ever closer to needing a bail-out. It was not even that the Portuguese Prime Minister, Jose Socrates, had resigned and that there could be a political vacuum in Lisbon for two months. It was more fundamental than that.

Portugal's parliament had rejected an austerity plan that carried the imprint of the European Central Bank and the European Commission. The country was told that an extra round of spending cuts and tax increases was essential to appease the markets. It was sold as a matter of survival. All the pleadings counted for little. The plan - the fourth austerity package in the space of a year - was thrown out. The people had had enough of belt-tightening. They would be squeezed no more.

Now Portugal's political parties say they'll respect the deficit-cutting targets, but elections lie ahead and the people will deliver their verdict.

All of this reflects a deeper trend. A fault line is developing between Europe's prosperous north and those debt-ridden countries on the periphery.The plates are shifting, creating a divide. The people in the northern countries are increasingly frustrated at having to bankroll the weaker nations. At the same time the people in the Republic of Ireland, Greece, Portugal and elsewhere are increasingly resistant to the austerity imposed on them. There is increasing tension between the bankrollers and the bailed-out.

Now in order to fix the crisis the EU has agreed to increase the lending capacity of the current fund and to set up a permanent bail-out mechanism after 2013. With it comes a "grand bargain" drawn up by Germany. In exchange for being Europe's paymaster Berlin has demanded a say in how other economies are run. So there will be a pact aimed at bringing eurozone countries closer together in areas like tax rates and wage bargaining. Economic co-ordination will have arrived. Sanctions will rein in those inclined to run up deficits.

Whether these measures truly address the cause of the crisis is an interesting question. But even before they are introduced there is potential trouble.





The historian Niall Ferguson recently described it as a giant "Ponzi scheme" where the burden of supporting weaker nations was placed on the shoulders of an "ever-shrinking number of healthy ones".

On 17 April Finland will hold an election.The party that may end up holding the balance of power is the True Finns. It opposes increasing the size of the EU's bail-out fund and wants the whole deal renegotiated.

A casual glance at today's German papers indicates just how unpopular a larger bail-out fund is with German voters. Bild said "the old promise that we won't pay for others has been broken once again". Several German papers pointed out that topping up the euro rescue fund would now cost 22bn euros (£19bn). That is money up front. Kurt Lauk from the CDU is quoted as saying "Europe is on the threshold of becoming a transfer union."

In response to the collapse of the Portuguese government the German Chancellor Angela Merkel said: "A lot depends now on those who represent Portugal making it clear that Portugal feels obliged to stick to the goals" of its deficit-cutting programme.

But say the mood is shifting. Say the ability of weaker states to adopt austerity measures is weakening. What then?

In Ireland - despite a bail-out - the crisis is not yet over. The new government says that the bill to bail out the sickly banks is still growing. It may need a further rescue. Otherwise the threat is there. Investors, including French and German institutions, will have to be burned. There will be further bank stress tests next Thursday. The Irish government is hemmed in. There is growing hostility towards Brussels. The public won't take more austerity.

And even though the bail-outs have bought some breathing space they have not solved the fundamental problem. Greece has had the interest rates of its loans reduced and its repayment period extended, yet the country shows no sign of being able to grow its way out of its debt crisis. Its tax revenues are actually falling. Growth is elusive. Sooner or later Greece will have to face its debt mountain.

Chancellor Merkel offers no relief. "Member states," she said at the summit, "face many years of work to atone for past sins". And that's part of the problem - countries like Greece, Ireland and Portugal will be taking the austerity medicine not just for this year, but quite possibly for a generation.

As Charles Grant from the Centre for European Reform observes, "there may be a time when, even if politicians want to do the right thing for the euro, the public will not allow them to do it."

Brussels is often a strange world. There is a Panglossian upbeat tone to much of what is said publicly, whilst economist after economist predicts a restructuring of the debt is coming.

This was supposed to be the summit that delivered the comprehensive package to end the eurozone crisis. It hasn't. Three months of uncertainty lie ahead. The fix is not in. A line has not been drawn. And tensions are rising.

