A DAY before the European Union was awarded the Nobel Peace Prize, the bloc’s leaders were at a ‘State of Europe’ conference bemoaning Europe’s crisis of confidence and inability to compete effectively with emerging powers.

The mood was grim as policymakers complained about the lack of “solidarity” among people and countries and warned that ordinary Europeans were becoming more and more disconnected from the EU.

The EU must urgently create jobs for millions of young unemployed people across Europe, said European Commission President José Manuel Barroso. He said it was important to move from the focus on austerity and belt-tightening measures to an emphasis on growth and jobs.

Reforms being undertaken by governments have to be socially acceptable, he said, adding that despite the current economic crisis, there must be space for job-generating investments. A balance had to be found between fiscal consolidation, deep structural reform and targeted investments which create jobs.

Barroso’s mood changed dramatically only hours later as the Norwegian prize jury announced that the 27-nation bloc was being awarded the peace prize for its achievements in ending war and conflict across the continent.

The prize was undoubtedly a badly needed morale boost both for Barroso and for the 60-year-old Union in the midst of a midlife crisis.

In fact even as it announced the award, the Nobel committee warned that the financial crisis could lead to a return to “extremism and nationalism”. It urged Europeans to remember the EU’s role in building peace and reconciliation among enemies who fought Europe’s bloodiest wars, even as they tackle the economic crisis that threatens its future.

Not surprising while pro-EU leaders across Europe have hailed the prize, anti-European politicians have been derogatory about the award. The announcement was met with negative reactions in debt-ridden countries like Spain and Greece, where many blame Germany and other northern EU neighbours for the painful austerity measures like higher taxes and job cuts they have endured in a so-far failed effort to salvage their floundering economies.

Certainly, there is not much to celebrate in modern-day Europe: the financial crisis drags on and on, putting 25 million people out of work. The prize will do nothing to spur economic growth in Greece or bring down the borrowing costs of some of the weaker countries that use the euro.

Many argue that EU leaders need to take a page from the past, with another leap of the imagination, beyond the economics of austerity to a new politics of solidarity, backstopped by deeper political as well as economic integration.

Barroso has proposed a “federation of sovereign states” but the idea is not popular. More and more there is talk of a British exit from the EU, with some suggesting that instead of focusing on “more Europe”, the bloc should consider becoming smaller.

Still, past achievements must be recognised and celebrated. The EU has played a major role in bringing peace to a continent so that today war between one-time enemies seems impossible.

Growing out of the devastation of the Second World War, the premise of the project was that closer economic interdependence would ensure that centuries-old enemies never again turn on each other. The EU is now made up of 500 million people in 27 nations, with others lined up to join.

But while economic ties once brought peace, the economic crisis is now pitting nations against each other. Countries in the south rage against the economic dominance of Germany while Germans criticise “lazy southerners” who cannot balance the books.

As the economies flounder, extremist groups are on the rise. In Greece, the Golden Dawn party, branded as neo-Nazi by opponents, has soared in popularity. Marine Le Pen, head of the far-right National Front in France has said that the EU does not deserve the prize.

“This is practically a provocation considering the suffering of millions of Europeans who today see themselves led by the European Union to a veritable economic and social war,” she said. “Three years ago, it was Barack Obama who won it while he was engaged in military wars. So this Nobel Peace Prize has actually become a Nobel prize of war.”

However, EU insiders also insist that Europe is about values: human rights and democracy, as well as freedom and prosperity.

They argue that even in the midst of crisis, countries are lined up to join the bloc and that pro-democracy activists from Burma to Belarus cite European standards as the benchmark by which they wish to hold their governments to account.

The prize should also prompt the bloc’s leaders to reflect on how they can continue to work for peace and stability in the 21st century. Europe’s use of its ‘soft power’ tools of trade, aid and diplomacy were effective in bringing former communist nations into the bloc and bringing peace to the Balkans.

The EU should now flex its soft power in other parts of the globe with more determination. Many countries and regions can learn from Europe’s peace-building efforts, its success in managing rivalries and competition between nations and ethnic groups.

Small wonder then that many Asians insist that Europe should become more closely involved in trying to resolve territorial claims in the East and South China Seas for instance. Others argue that the EU should become more active in bringing an end to the civil war in Syria and work harder to bring economic stability in North Africa.

But the truth is that modern-day Europeans and Europe have little appetite for such an ambitious, global peace-making role. Their focus for the moment is on beating the crisis, a task that looks ever more difficult.

The writer is Dawn’s correspondent in Brussels.