Press

"For the IMF to be devoting so much financial and human capital to try to combat a problem in Europe which is largely political in origin and can only be solved by political agreement is controversial," said Simon Tilford, the chief economist of the Centre for European Reform in London. "It threatens the IMF's credibility. There is a risk that her perceived objectivity will be brought into question because of this," Mr Tilford said.

"I don't see how this ends in anything other than a run to the exit. I cannot think of one European country that wants to be in Afghanistan more than the Americans," said Tomas Valasek of the Centre for European Reform in London. "What will be important is what happens in two or three years from now If Obama gets re-elected, and it all goes wrong, and Kabul has turned into another Mogadishu - then he would clearly have some explaining to do."

"It would be a mistake to say they can never leave," says Simon Tilford, chief economist at the Centre for European Reform. Tilford said an orderly transition could be planned with temporary backing from the rest of the eurozone to ensure that there is no panicked withdrawal of Greek investments. "If you argue that it can never happen you must be arguing that Greece must default on its debts in the eurozone and remain in the currency, that's possible and it might be the most likely outcome. But I think it would be mistake to say they can never leave.

Ms Lagarde has also proven her ability to engage with Germany on eurozone reform. In March 2010 she made a bold call on Germany to boost its domestic demand, much to the relief of other smaller countries in the eurozone, said Simon Tilford, chief economist at EU think tank Centre for European Reform. While she may have pulled her punches more recently as France privileges its relationship with Germany, she is better placed than any other to take a more assertive line in Europe, he said.

"It's hard enough to get the electorate to support austerity at the best of times," said Simon Tilford, the chief economist of the Centre for European Reform in London. "They promised endless austerity with no prospects of a return to growth, and there will be mounting opposition to this. The EU and IMF are insisting on a course of action that has already failed," Mr Tilford said. "That is not going work but is going to impose huge economic and social costs."

As Tomas Valasek, director of foreign policy and defence at London-based think-tank the Centre for European Reform, puts it in a recent paper, Surviving Austerity: The case for a new approach to EU military collaboration, a "wave of budgetary austerity" is eroding European nations' defences, and their armed forces "will lose important skills and capabilities unless they can find ways to save money through collaboration".

"The agreement called into question the sustainability and relevance of the EU's security and defence policy," said Clara Marina O'Donnell, defence expert at the Centre for European Reform in London.

"It still slightly worries me that Erdogan portrays himself as the natural long-term leader of Turkey," Katinka Barysch, deputy director at the Centre for European Reform, said in an interview. "A country too centralised, too focussed on one personality usually leads to very bad decision-making because if one leader is in power for too long he’s usually surrounded by yes-sayers."