EMBATTLED European Union leaders took time off from their daily eurozone woes to collect the Nobel Peace Prize in Oslo last week — but the bloc’s 500 million citizens are not celebrating.

Many across Europe are worried that the long-running economic crisis is also provoking deep political and social unease.

Initial concerns that Greece would have to leave the eurozone have been replaced by an even stronger worry about an inevitable British exit from the EU.

Meanwhile, following in the footsteps of Scotland, Spain’s most prosperous province, Catalonia, is clamouring for independence. Young Europeans, faced with a future with no jobs, are either migrating to the bloc’s richer nations like Germany or leaving Europe in search of a better life in Asia, Africa or Latin America.

Even more seriously, the disconnect between the EU and ordinary people is getting wider as unemployment rises and extreme-right populist parties across the continent step up their anti-EU clamour and anti-immigrant rhetoric. Certainly, the EU has made serious headway in containing the worst of the economic crisis. A raft of new initiatives are in place to help out the worst-affected nations, including Greece, Italy, Spain and Portugal.

In a significant move, EU leaders have just agreed to make the European Central Bank the single supervisor of eurozone banks. Such a ‘banking union’ is being described as an important step forward in the bloc’s fight to ease the monetary crisis.

But the bloc has yet to take equally strong action to contain and combat the rise of extreme-right parties. The point was made by Norwegian Nobel Committee chairman Thorbjoern Jagland who recalled the 80 million European victims of war and extremism last century, warning: “Peace must not be taken for granted. We have to struggle for it every day.”

The Nobel Committee has come under criticism for awarding the prestigious 2012 award to the EU at a time when it is riven by divisions and violent anti-austerity protests. Mr Jagland said the award did not reflect a belief that the EU is perfect.

“Europe needs to move forward. Safeguard what has been gained. And improve what has been created, enabling us to solve the problems threatening the European community today,” he said.

The award was accepted by a threesome of EU leaders — EU president Herman Van Rompuy, European Commission President José Manuel Barroso and European parliament president Martin Schulz.

“When prosperity and employment, the bedrock of our societies, appear threatened,” said Van Rompuy, “it is natural to see a hardening of hearts, the narrowing of interests, even the return of long-forgotten fault lines and stereotypes.” But neither Rompuy nor other EU leaders have as yet come up with an effective strategy to counter the simplistic arguments of the far-right. Instead, the question is often brushed off as a temporary phenomenon which will disappear as the economy revs back into high gear.

There are two problems with this approach. First, Europe’s economic recovery will be a long time coming. Recession may give way to stagnation but no miraculous change is expected in high unemployment rates that plague most countries within the bloc.

Second, once far-right parties make their mark on the political landscape, it is almost impossible to stop their increase in popularity.

For many, the most worrying development is the emergence in Greece of the ‘Golden Dawn’ party which has 18 seats in parliament. Its supporters wear black shirts and use neo-Nazi symbols. They are nationalistic, xenophobic and aggressive — and proud of it. In the past few weeks, they have smashed up immigrant market stalls, shut down a theatre production they did not like and applauded the flag of the former military dictatorship.

Attacks on migrants are on the rise across Athens. Prime Minister Antonis Samaras has compared the situation in Greece with the last days of the Weimar Republic in Germany — a country that had debts it could never repay and turned to Adolf Hitler.

It is not just in Greece that support for the extreme right is gathering pace. Violent anti-immigrant rhetoric is on the rise in several countries. Jobbik, for example, is the third largest political party in Hungary. It has made its name with outspoken attacks on the Roma minority. And a few days ago one of its MPs caused outrage with a speech in parliament. A list of names should be compiled, he declared, of Jews who pose a threat to national security.

Preoccupied with the eurozone crisis and more recently with their wrangling on the size of the future EU budget, the bloc’s leaders almost never really discuss Europe’s social woes.

“The developments we have are so frightening,” argued Hannes Swoboda, the leader of the socialist group in the European parliament. “The European Union, which was founded to overcome the consequences of racism, has to react but it does not really react,” he complained.

Amnesty International has warned that growing numbers of European political leaders are promoting a variety of anti-minority messages, and enjoying increasing popularity. In Brussels, EU policymakers seem out of touch with the reality of their citizens’ daily trials.

European Commission President Barroso did admit recently, however, that although “mainstream parties are very committed to freedom, democracy and European values … we have to be vigilant. The old demons are still there”.

In fact, the “old demons” are thriving — not just in Greece and Hungary but across Europe. The mainstream parties mentioned by Barroso are in many cases either adopting the xenophobic rhetoric of the far-right or making alliances with them to stay in power.

Given the current grim mood in Europe, the Nobel Prize is not really a morale booster but more a reminder of the stark contrast between the EU’s past achievements and its uncertain future.

The writer is Dawn’s correspondent in Brussels.