Listening to Justin Webb stuttering himself into silence on Today yesterday morning was a reminder of how poorly trained London-based journalists are on how Europe works. Webb was a master of Capitol Hill in Washington and unrivalled in reporting the nuances of US politics. But when it comes to Europe, the Westminster-White City media bubble is lost.

So who wins and who loses? Angela Merkel is a clear winner. She has a vision of a KleinEuropa – a small, inward-looking Europe in the model of her DeutschSchweiz, Germany as a bigger version of Switzerland, comfortable, democratic, decent, exporting everywhere and hoping the world's problems will stay somewhere else.

The original drafters of first the constitution and then the Lisbon Treaty wanted a strong EU president to represent the interests of the nation states that form Europe. Instead, there will be a modest, competent, Belgian fixer from the one country in Europe where linguistic apartheid denies a chance of education or access to public services if the wrong language is spoken. Belgium is a neat country but a unified nation it isn't. President Van Rompuy represents the pure federalism of the Brussels model of Europe. So a major loser is William Hague who fought a successful political campaign against Tony Blair but lost the war to ensure that Britain would increase the status of the nation states in Europe. Instead the eurocracy have inserted one of their own. If the Tories form the next government they will find a much stronger Brussels to deal with than if they had put nation above politics and backed Blair, a pro-American, pro-business Brit as the No 1 in Europe.

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But Blair's record on Iraq was unacceptable to many. As I toured Europe listening, writing and speaking on these new posts in recent weeks, I was overwhelmed by the hostility to Blair. It was almost as if the anti-American European elites preferred Saddam Hussein in power. Europe's visceral hatred for George Bush was transferred to Tony Blair in a manner that any psychoanalyst would recognise.

Yet the re-elected president of the EU Commission, José Manuel Barroso, hosted the meeting in the Azores which launched the Iraq invasion. Cathy Ashton loyally supported the war. Other candidates from Latvia and the Netherlands were all supporters of tackling Saddam. But it is Blair who carries the Iraq millstone around his neck, and it cost him his chance of becoming Europe's first president.

By contrast, Gordon Brown, and his small but effective EU team, outmanoeuvred comrades and rivals. The European socialists, united in dislike of Blair, insisted that the presidency should go to the centre-right EPP grouping, which opened the way to Van Rompuy. With Britain's Conservatives out of the EPP and now in their own comfort zone with nationalist populists from Poland, Latvia and the Czech Republic, the EPP did not have to listen to a British point of view.

The socialists wanted one of their own. With considerable condescension Eurosocialist grandees offered the prize to David Miliband, who has won glowing reviews as Europe's new Anthony Eden – young, fluent, and effective and someone who can talk European to great effect while staying firmly Atlanticist. Miliband spurned the offer with a disdain bordering on contempt for the socialists' hatred of his old mentor, Blair. The Foreign Secretary made clear his future was in British politics and that he could do more for Europe in London than in Brussels.

The socialists searched hard for an alternative, looking for someone who would be hostile to America and defend trade union rights as vice-president of the European Commission. In fact, the new foreign minister post requires taking part in about 200 statutory meetings a year and Cathy Ashton will collect more Air Miles than BA's Willie Walsh. Barroso will be the master of the commission. Brown waited patiently until the socialists exhausted themselves in their campaign against Blair and then stepped in neatly with the offer of Lady Ashton.

Largely unknown to the self-referring elites of the Euro left, she had made no enemies and as one of the most approachable and likeable commissioners around, her down-to-earth Lancashire style won only friends.

The socialists gratefully accepted Brown's candidate even if she was a protégée of Blair, was thoroughly pro-American, and, whisper it quietly, had not opposed the invasion of Iraq. So Brown emerges as a clear winner in the game of slotting in a solid social democratic British woman in a key European position. Already, Hillary Clinton has made clear she will see High Representative Ashton as her principal interlocutrice in Europe. These two English-speaking women are going to have a powerful influence in the reshaping of world affairs under way.

Lady Ashton will have to take into account what the Foreign Office or Quai d'Orsay wants. But she will have the power of initiative, and she can highlight what she wants Europe to do on the world stage. While big nations will hang on to their pretension to being foreign policy powers, bit by bit, the blue and yellow flag of Europe will represent the smaller nations of Europe in far-flung parts of the world.

At the end of 12 years of Labour government, a key Labour figure has been inserted into the heart of Europe. Many wanted Blair but more did not. Cathy Ashton will be the continuation of pro-European Blairism by other means. It will not, however, be her job to answer the question, what next? That is for Nicolas Sarkozy, Angela Merkel and Gordon Brown to answer.

After nearly a decade of labour to give birth to a constitutional treaty, Europe has flinched from appointing leaders that CNN and al-Jazeera have heard of. Washington might now have a number to call, but has Europe the confidence not only to shape its destiny but also to influence the world by being self-confident instead of always looking to America for a lead to endorse or to reject? Must European values and norms as enshrined by the Council of Europe's Convention on Human Rights be trumped by German, French and British mercantilism which prefers a sale of a product to the selling of democracy and human rights?

And even with Cathy Ashton in place, when will Britain engage with Europe as a political project? Labour is on its 14th – or is it 15th? – Europe minister and most ministers prefer to see, hear and speak no Europe. David Cameron had endorsed the unsplendid isolation of his deputy William Hague. President Obama had made clear he wants Europe to get its act together. In London he will have to wait a long time, and it is far from clear that other EU capitals want to rise to the challenge of shaping an EU able to stand on its own feet.

Denis MacShane is the Labour MP for Rotherham and a former Europe Minister