Once again, the EU's hubris brings nemesis Only a week ago, José Manuel Barroso, president of the European Commission, was celebrating the supposed "positive signs" of a crisis in retreat, with current account deficits narrowing . As if on cue, along comes Cyprus to remind us that this now five-year-old maelstrom is far from over; lasting solutions seem as far away as ever. To guard against the capital flight this proposal would trigger, Nicosia proposes draconian controls to prevent Russian and other depositors removing their money. These will inevitably spell the end of Cyprus's offshore banking industry, though this may scarcely seem to matter for a model already essentially broken beyond redemption. Capital controls would also make Cyprus a devalued, second-class member of the euro. A Cypriot euro would be rendered worthless outside its own borders, a bit like telling Scottish depositors that their pounds can no longer be spent in England. For Cyprus, the single currency would be dead in all but name. More worrying still from a eurozone perspective, the plan threatens to spread panic to depositors in other weakened single currency economies. Russian assistance is still possible, but is regarded as anathema by Europe (and by the UK, with its important military bases on the island), and in any case would suffer from the same problem as a larger bail-out from Europe, in that it would saddle Cyprus with an unsustainable level of public debt. As for any European solution, more solvent nations are digging in their heels. There will be no help, says Germany's Angela Merkel, without adequate levels of burden-sharing. This is understandable - why should German taxpayers bail out rich Russian oligarchs? - but it also fails to recognise the joint and several liability which must be the cornerstone of any lasting currency union. As long as solvent northern states refuse to accept this responsibility, the system will remain inherently unstable and crisis-prone. On past form, some kind of inconclusive compromise will be cobbled together by Monday's deadline. Indeed, at the time of going to press, it looked as though some variation of Plan C might be agreed. Whatever eventually happens, it won't lift the mood of deep gloom and despondency which has settled like a pall over the European economy. Protest parties are on the rise, and the old certainties are being swept away. For George Osborne, there could scarcely be a more threatening backdrop for a fiscal strategy that relies crucially on the following wind of economic recovery across the Channel. On present form, he's not going to get it. Oh, what destruction Europe in its pomp has created for itself.